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Constitutional Law 
in 1919-1920 


BY 

THOMAS REED POWELL 

A 


IReprinted prom the Michigan Law Review, Voe. XIX, 
No. I, 2 and 3-1 


Copyright 1921 

Ry the Michigan Law Review Association 



ANN arbor 

THE MICHIGAN LAW REVIEW ASSOCIATION 
1921 


















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CONSTITUTIONAL LAW IN 1919-1920* 

A REVIEW OF THE DECISIONS OF THE SUPREME COURT OF 

THE UNITED STATES ON CONSTITUIONAL QUESTIONS 
DURING THE OCTOBER TERM, 1919 

r M NTIS review aims to include all the decisions on constitutional 
questions rendered by the Supreme Court of the United States 
during the October Term of court which began in October, 1919, and 
ended in June, 1920. * 1 The treatment for the most part contents itse lf 

* This is the first of a series of three papers on this topic. The others 
will appear in succeeding issues. 

1 Similar reviews of decisions from 1914 to 1919 have appeared in the 
American Political Science Review, XII, 17-49, 427-457, 640-666, XIII, 
47-77, 229-250, 607-633, and XIV, 53-73. That journal plans to continue to 
review each year the more important decisions of the Supreme Court. It 
also publishes in nearly every issue a review called “Judicial Decisions on 
Public Law.” Recent ones by Robert E. Cushman will be found in volume 
XI, pp. 545 - 555 , 720-730, volume XII, pp. 95-105, 272-287, 475-488, 685-694, 
volume XIII, pp. 100-107, 281-292, 451-459, and volume XIV, pp. 303-316, 
461-470. In the Record of Political Events published as a supplement to each 
September issue of the Political Science Quarterly is a section called “The 
Federal Judiciary” which summarizes briefly the important decisions of the 
Supreme Court during the preceding year. In 35 Pol. Sci. Quart. 41 i, is an 
article called “The Supreme Court and the Constitution, 1919-1920,” which 
reviews the important decisions of the past year. The Quarterly plans to 
publish similar articles in each September issue. In the American Bar 
Association Journal, volume VI, pp. 22-33, is a “Review of Recent Supreme 
Court Decisions” by S. S. Gregory, dealing with selected decisions. It is an¬ 
nounced that similar reviews will be contained in the succeeding issues. Each 
issue of the Bulletin oe the National Tax Association contains a depart¬ 
ment called “Decisions and Rulings” which reviews a large number of de¬ 
cisions on taxation. This is not confined to decisions of the Supreme Court. 



— 2 - 


with exposition. The footnotes give references to articles and edi¬ 
torial notes in recognized law journals commenting on the cases here 
reviewed and on the more important constitutional decisions of other 
courts. * 2 The classification of the cases and the arrangement of 
topics are not satisfactory, but no alternative seems distinctly su¬ 
perior. classification on the basis of the clauses of the Constitu¬ 
tion under which the cases arise would have decided demerits. Under 
the Fourteenth Amendment we should have to jumble together com¬ 
plaints against judicial procedure, tax laws, police measures, exer¬ 
cises of eminent domain and other governmental action. It seems 
preferable to follow established distinctions between various govern¬ 
mental powers and to let them set the plan for the main structure 
of the classification. 

I. Miscellaneous National Powers 

The validity and the effect of the Eighteenth Amendment 3 was 
passed upon in two cases. Hawke v. Smith 4 decided that a state 

Beginning with volume 33, the Harvard Law Review contains a series of 
articles called “The Progress of the Law”, written by professors in the Har¬ 
vard Law School. Cases on police power and administrative law will be found 
in Beale, “Municipal Corporations” (XXXIII, 1058) ; cases on taxation in 
Beale, “Conflict of Laws” (XXXIII, 1), and Warren, “Wills and Adminis¬ 
tration” (XXXIII, 556) ; and cases on the jurisdiction and procedure of 
courts in Beale, “Conflict of Laws” (XXXIII, 1). and Scott, “Civil Pro¬ 
cedure” (XXXIII, 236). 

2 It is intended to include references to all articles and notes in law jour¬ 
nals which deal with any question of public law. References given without 
introduction are to discussions of the case considered in the text. For refer¬ 
ence to articles in other than technical law journals, the issues of the Ameri¬ 
can Economic Review, American PIistoricae Review, and American Poi,it- 
icar Science Review should be consulted. Each issue of these reviews con¬ 
tains a list of articles in periodicals, a considerable number of which have to 
do with matters out of which spring issues of constitutional law. 

3 “Section 1. After one year from the ratification of this article the man¬ 
ufacture, sale, or transportation of intoxicating liquors within, the importation 
thereof into, or the exportation thereof from the United States and all terri¬ 
tory subject to the jurisdiction thereof for beverage purposes is hereby 
prohibited. 

Section 2. The Congress and the several states shall have concurrent 
power to enforce this article by appropriate legislation.” 

4 253 U. S. -, 40 Sup. Ct. 495 (1920). See also Hawke v. Smith, 253 

U. S.-, 40 Sup. Ct. 498 (1920), applying the same principle to the Suffrage 



— 3 — 


constitution cannot authorize a referendum to the electorate from the 
action of a state legislature in ratifying an amendment to the federal 
Constitution. The power to ratify was said to have its source 
in the federal Constitution. The Fifth Article which provides for 
amendments is a grant of authority by the people to Congress. Con¬ 
gress is restricted to the choice between two methods of ratification. 
It may send an amendment to state legislatures or to state conven¬ 
tions. When the Constitution uses the term ‘"state legislature” it 
means the representative law-making body and not the general elect¬ 
orate. What the term meant when the Constitution was adopted, it 
means still. The argument that the Constitution looks to ratification 
by legislative action in the states is unsound. “Ratification by a 
state of a constitutional amendment is not an act of legislation within 
the proper sense of the word. It is but the expression of the assent 
of the state to a proposed amendment.” Legislatures get their au¬ 
thority to ratify, not from the people of the state, but through the 
grant to Congress by the people of the United States. A case 3 which 
allowed a state with the assent of Congress to apply the referendum 
to an act of the state legislature fixing the boundaries of congres¬ 
sional districts was said to be inapposite, since such action is legisla¬ 
tive in character while the ratification of an amendment is not. “The 
choice of means of ratification was wisely withheld from conflicting 
action in the several states.” Otherwise there might be “endless 
confusion in the manner of ratification of federal amendments.” It 
is apparent that what Mr. Justice Day says about the referendum 
is applicable to other state attempts to restrict state legislatures in 
ratifying amendments to the federal Constitution, and that the Ten¬ 
nessee legislature was justified in acting on the Nineteenth Amend¬ 
ment in disregard of the requirement of the Tennessee constitution 
that an election of members of the legislature must intervene between 

Amendment. See 91 Cent. L. J. i. For discussions of the referendum ques¬ 
tion prior to the Supreme Court decision, see William Howard Taft, “Can 
Ratification of an Amendment to the Constitution Be Made to Depend on a 
Referendum?”, 28 YaeE L. J. 821, and notes in 8 Calie. L. Rev. 185, 89 Cent. 
L. J. 334, 19 Coeum. L. Rev. 502, 4 Corneee L. Q. 195, 33 Harv. L. Rev. 287, 
23 Law Notes 62, 102, 119, 24 Law Notes 64, 4 Mass. L. Q. 236, 342, and 
18 Mich. L. Rev. 51, 698. Some of the discussions cited in note 6, infra, also 
consider the referendum question. 

'Davis v. Hildebrant, 241 U. S. 565, 36 Sup. Ct. 708 (1916). 



the submission of a proposed amendment by Congress and its con¬ 
sideration by the state legislature. 

The Eighteenth Amendment as a whole was sustained in Rhode 
Island v. Palmer. * * * * 5 6 The court introduced a novelty into its practice 
by contenting itself with a statement of its conclusions and refrain¬ 
ing from giving its reasons. This is often done in so-called mem¬ 
orandum opinions, but these have heretofore been confined to ques¬ 
tions of minor importance or to issues already well settled. The 
validity of the Amendment was contested on the ground of alleged 
defects in the methods of its submission and adoption and on the 
basis of objections to its substance. Hawke v. Smith 7 was cited for 
the affirmation of the court that a state cannot apply a referendum 

*253 U. S.-, 40 Sup. Ct. 486 (1920). See 91 Cent. L. J. i. For dis¬ 

cussions of the validity of the Amendment prior to the Supreme Court de¬ 
cisions, see Everett V. Abbott, “Inalienable Rights and the Eighteenth Amend¬ 
ment”, 20 Colum. L. Rev. 183, Lucilius A. Emery, “The Eighteenth Amend¬ 

ment to the Constitution of the United States”, 13 Maine L. Rev. 121, William 
L. Frierson, “Amending the Constitution of the United States”, 33 Harv. L. 
Rev. 659, Frank W. Grinnell, “Limitations on the Kind of Amendments to the 
Federal Constitution Provided for by Article V”, 5 Mass. L. Q. 116, Fred B. 
Hart, “The Amendatory Power Under the Constitution, Particularly with 
Reference to Amendment 18”, 90 Cent. L. J. 229, Howard C. Joyce, “The 
Prohibition Amendment as an Encroachment on the Inherent Rights of the 
States”, 23 Law Notes 26, William L. Marbury, “The Limitations Upon the 
Amending Power”, 33 Harv. L. Rev. 223, D. O. McGovney, “Is the Eighteenth 
Amendment Void Because of Its Contents?”, 20 Colum. L. Rev. 499, Fred 
H. Peterson, “Modern Views on Amending the Constitution”, 89 Cent. L. J. 
188, George D. Skinner, “Intrinsic Limitations on the Power of Constitu¬ 

tional Amendment”, 18 Mich. L. Rev. 213, Wayne B. Wheeler, “The Con¬ 
stitutionality of the Constitution is Not a Justiciable Question”, 90 Cent. 
L. J. 152, Justin DuPratt White, “Is There an Eighteenth Amendment?”, 

5 Cornell L. Q. 113, 23 Law Notes 188, George Washington Williams, “What, 

if Any, Limitations Are There Upon the Power to Amend the Constitution 
of the United States?”, 6 Va. L. Reg. n.s. 161, and notes in 18 Mich. L. Rev. 
155 , 700. For discussions of the interpretation of the second section of the 
Amendment see Minor Bronaugh, “Concurrent Jurisdiction”, 23 Law Notes 
85, O. K. Cushing, “‘Concurrent Power’ in the Eighteenth Amendment”, 8 
Calie. L. Rev. 205, Wayne B. Wheeler, “Which Definition of ‘Concurrent 
Power’ Will the Supreme Court Choose?”, 90 Cent. L. J. 283. “‘Concurrent 
Jurisdiction’ Not the Same as Concurrent Power”, 22 Law Notes 107, and 
note in 33 Harv. L. Rev. 968. 

7 Note 4, supra. 



— 5 — 


to the rejection or ratification of an amendment. An earlier case 8 on 
the vote necessary to pass a bill over the President’s veto was ad¬ 
duced for the decision that an amendment may be proposed by a 
vote of two-thirds of the members present in each house, provided 
there is a quorum. It is not necessary to have “a vote of two-thirds 
of the entire membership, present and absent.” The proposal by 
the requisite vote “sufficiently shows that the proposal was deemed 
necessary by all who voted for it. An express declaration that they 
regarded it as necessary is not essential.” The objections urged 
against the substance of the amendment were that it was an “addi¬ 
tion” and not an “amendment” because not germane to anything in 
the original Constitution, that it was legislation and hence improper 
for inclusion in the Constitution, and that it interfered with the 
powers reserved to the States by the Tenth Amendment and was a 
step towards the destruction of the federal system ordained by the 
Constitution and therefore not within the amending power. Without 
specifying these objections, the court through Mr. Justice Van 
Devanter states succinctly that the prohibition provision of the 
Amendment is within the amending power, is now a part of the Con¬ 
stitution and “must be respected and given effect the same as other 
provisions of that instrument,” is “operative throughout the entire 
territorial limits of the United States” and “of its own force invali¬ 
dates every legislative Act, whether by Congress, by a state Legisla¬ 
ture, or by a territorial assembly, which authorizes or sanctions what 
the section forbids.” 

The decision on the validity of the Amendment was unanimous. 
Mr. Justice McReynolds concurred in the disposition of the cases, 
but declined to express himself on the effect of the amendment on 
the power of the states. Mr. Justice McKenna went further and 
disagreed with the interpretation of the Amendment announced by 
the majority. This interpretation was put by Mr. Justice Van 
Devanter as follows: 

“The second section of the amendment—the one declaring 
‘The Congress and the several states shall have concurrent 
power to enforce this article by appropriate legislation’—does 


8 Missouri Pacific Ry. v. Kansas, 248 U. S. 279, 39 Sup. Ct. 93 (1919). 




— 6 — 


not enable Congress or the several states to defeat or thwart 
the prohibition, but only to enforce it by appropriate legis¬ 
lation. 

“The words ‘concurrent power’, in that section, do not mean 
joint power, or require that legislation thereunder by Con¬ 
gress, to be effective, shall be approved or sanctioned by the 
several states or any of them; nor do they mean that the 
power to enforce is divided between Congress and the several 
states along the lines which separate or distinguish foreign and 
interstate commerce from intra-state affairs. 

“The power confided to Congress by that section, while not 
exclusive, is territorially coextensive with the prohibition of 
the first section, embraces manufacture and other intrastate 
transactions as well as importation, exportation and interstate 
traffic, and is in no wise dependent on or affected by action or 
inaction on the part of the several states or any of them.” 

The Chief Justice, in a separate concurring opinion confined to the 
interpretation of the Amendment, expressed his profound regret that 
the court should have been content to state its conclusions without 
adding its reasons. He in effect construes “concurrent power” to 
mean “equal and independent power”, and insists that the opposite 
construction contended for would result in a paramount power of 
Congress or the states and not a concurrent power, and would also 
in effect nullify the amendment. In elaboration he adds: 

“Comprehensively looking at all these contentions, the con¬ 
fusion and contradiction to which they lead, serve in my judg¬ 
ment to make it certain that it cannot possibly be that Congress 
and the states entered into the great and important business 
of amending the Constitution in a matter so vitally concern¬ 
ing all the people solely in order to render governmental action 
impossible, or, if possible, to so define and limit it as to cause 
it to be productive of no results and to frustrate the obvious 
intent and general purpose contemplated. It is true indeed 
that the mere words of the second section tend to these results, 
but if they be read in the light of the cardinal rule which 
compels a consideration of the context in view of the situation 
and the subject with which the amendment dealt and the pur- 


— 7 — 


pose which it was intended to accomplish, the confusion will 
be seen to be only apparent.” 

Mr. Justice McKenna’s disagreement was based largely on the 
normal and natural meaning of the words ‘'concurrent power” which 
the Chief Justice conceded. He refused to assent to the proposition 
that the interpretation put upon concurrent power by him would 
practically nullify the amendment, saying hopefully: 

“The conviction of the evils of intemperance—the eager 
and ardent sentiment that impelled the amendment, will impel 
its execution through Congress and the States. It may not 
be in such legislation as the Volstead Act with its y 2 of i per 
cent, of alcohol or in such legislation as some of the states 
have enacted with their 2.75 per cent, of alcohol, but it will be 
a law that will be prohibitive of intoxicating liquor for bev¬ 
erage purposes. It may require a little time to achieve, it 
may require some adjustments, but of its ultimate achieve¬ 
ment there can be no doubt.” 

To this was added the comment that, if difficulties result from 
enforcing the amendment according to its terms, they are nothing 
with which the court has to do. The learned dissentient declares his 
belief that the framers of the amendment “meant what they said 
and that they must be taken at their word.” The word “concurrent”, 
he insists, has the “inexorable requirement of coincident or united 
action, not alternative or emergent action to safeguard against the 
delinquency of Congress or the states.” His analysis of the situation 
resulting from the amendment is as follows: 

“If it be said that the states get no power over prohibition 
that they did not have before, it cannot be said that it was 
not preserved to them by the amendment, notwithstanding the 
policy of prohibition was made national, and besides, there 
was a gift of a power to Congress that it did not have before, 
a gift of a right to be exercised within state lines, but with 
the limitation or condition that the powers of the states should 
remain with the states and be participated in by Congress 
only in concurrence with the states, and thereby preserved 
from abuse by either, or exercise to the detriment of prohibi- 


— 8 — 


tion. There was, however, a power given to the states, a 
power over importations. This power was subject to concur¬ 
rence with Congress and had the same safeguards.” 

The remaining question in the case was whether the power to en¬ 
force the prohibition of the first section of the Amendment justified 
Congress in putting the ban on liquor containing as little as one-half 
of one per cent, of alcohol by volume. The argument against this 
low limit was that, since the first section prohibited only intoxicating 
liquors, the enforcing legislation must permit the sale and manu¬ 
facture of non-intoxicating liquors. Otherwise the restrictive word 
“intoxicating” in the first section would be nugatory. The case sus¬ 
taining the one-half of one per cent, limit in the War Prohibition 
Act was sought to be distinguished on the ground that the war power 
is general and undefined, while the power under the Amendment 
is confined to enforcing the prohibition against liquor in fact in¬ 
toxicating. But the court, without stating or discussing these specific 
contentions, adduced the War Prohibition Cases 9 for the conclusion 
that, “while recognizing that there are limits beyond which Congress 
cannot go in treating beverages as within its power of enforcement, 
we think those limits are not transcended by the provision of the 
Volstead Act”. 10 

The War Prohibition Act of 1918, passed ten days after the 
armistice, came before the court in Hamilton v. Kentucky Distilleries 
& Warehouse Co ., 11 and was unanimously sustained. It was inter¬ 
preted to apply only to intoxicating liquors. Mr. Justice Brandeis 
said that “prohibition of the liquor traffic is conceded to be an appro¬ 
priate means of increasing our war efficiency”. He recognized that 
“the war power of the United States, like its other powers and like 
the police powers of the states, is subject to applicable constitutional 
limitations”, but he laid down that “the Fifth Amendment imposes 

9 Ruppert v. Caffey, note 12, infra. 

10 For an article on the Nineteenth Amendment, see Emmet O’Neal, “The 
Susan B. Anthony Amendment. Effect of Its Ratification on the Rights of 
the States to Regulate and Control Suffrage and Elections”, 89 Cent. L. J. 
169, 6 Va. L. Rev. 338. 

“251 U. S. 146, 40 Sup. Ct. 106 (1919). See 33 Harv. L. Rev. 585, 608, 
18 Mich. L. Rev. 706, and 29 Yale L. J. 437, 44°- For discussions prior to the 
decision, see 8 Calie. L. Rev. 44, 18 Mich. L. Rev. 159, and 29 Yale E. J. 113. 



— 9 — 


in this respect no greater limitation upon the national power than 
does the Fourteenth Amendment upon state power”. The question 
whether the immediate and absolute destruction of the value of in¬ 
toxicating liquors could be caused without compensation was dis¬ 
missed from consideration by pointing out that the Act gave seven 
months and nine days in which to dispose of liquors on hand. This 
was held to be a reasonable period. The fact that liquor is not 
readily marketable until reasonably aged was called merely an in¬ 
convenience to the owner attributable to the inherent character of 
the property, which inconvenience is not a taking of property in 
the constitutional sense. On the question whether the Act had be¬ 
come void by the passing of the war emergency, the court confined 
itself to declaring that it was not convinced that the emergency had 
passed when the suits in question were begun. The discussion on 
this point recognizes that change of circumstances may operate to 
render constitutionally unenforceable a statute concededly valid when 
passed, and assumes for the purpose of the case that the principle 
is applicable to exercises of the war power. But, in view of the hold¬ 
ing that the Act had not yet expired by its terms and of the facts 
that the treaty of peace had not yet been concluded, that the rail¬ 
roads were still under national control by virtue of the war powers, 
and other facts of public knowledge, the court found itself unable to 
conclude that the Act had ceased to be valid. The contention that 
the Eighteenth Amendment impliedly guaranteed immunity from 
prohibition until one year after its ratification was dismissed by 
pointing out that it would, if sound, emasculate the war power even 
if hostilities were at their height and would also release the grasp of 
state prohibition. 

The war power was extended still further in Ruppert v. Caffey , 12 
which by a vote of five to four sustained the Volstead Act of October 
28, 1919, with its suppression of the manufacture and sale of liquor 
conceded by motion to dismiss to be non-intoxiqating. Mr. Justice 
McReynolds, for the minority, declared that it was notorious that the 
war emergency had passed when the statute was enacted, at least so 

12 251 U. S. 264, 40 Sup. Ct. 141 (1920). See 33 Harv. L. Rev. 585, 608, 24 
Law Notes 25, and 5 Va. L. Reg. n. s. 874. Justices Day, Van Devanter, Mc¬ 
Reynolds and Clark dissented. 



— 10 — 


far as any justification for the suppression of non-intoxicating liquor 
is concerned. He implied that the statute thus enforced violated 
both the Fifth and Tenth Amendments. Calling the suppression of 
non-intoxicants the exercise of a power implied from an implied 
power, he queried: “If all this be true, why may not the second 
implied power engender a third under which Congress may forbid 
the planting of barley or hops, the manufacture of bottles or kegs, 
etc.?” He insisted that there is a distinction between the control 
which the states may exercise over non-intoxicants by virtue of their 
inherent power and that which may be wielded by Congress under 
authority inferred from the war power. For the majority, Mr. Jus¬ 
tice Brandeis answered that the argument that one implied power 
may not be grafted on another implied power is a mere matter of 
words. The “war power over intoxicating liquors extends to the en¬ 
actment of laws which will not merely prohibit the sale of intoxi¬ 
cating liquors but will effectually prevent their sale.” All the powers 
of Congress are express powers. The proper distinction is between 
“specific” and “general” powers. Thus the war power over intoxi¬ 
cating liquors is as full and complete as the police powers of the 
states, and the principle that the state may prohibit near beer as a 
means of suppressing the genuine article applies also to the war 
power of Congress. On the question of the absence of compensa¬ 
tion for the loss occasioned by the fact that the Volstead Act was in 
effect from the moment of its enactment, Mr. Justice Brandeis said 
only that “here as in Hamilton v. Kentucky Distilleries & Warehouse 
Co., there was no appropriation of private property, but merely a 
lessening of value due to a permissible restriction imposed upon 
its use.” 

The constitutionality of the Selective Service Law and the Espi¬ 
onage Act was reaffirmed in O'Connell v. United States 13 on the 
authority of cases decided after the writ of error in the O'Connell 
case was sued out. The opinion was confined to questions of inter¬ 
pretation and of federal practice. A conspiracy to obstruct recruit¬ 
ing and enlistment by persuasion was held to be a crime within the 
latter Act, and the former was found to cover false statements as to 
fitness or liability for service as well when made by private persons 


13 253 U. S. 


40 Sup. Co. 444 (1920). 



— II — 


as by officers charged with the enforcement of the law. In three im ¬ 
portant cases 14 sustaining convictions under the Espionage Act or its 
amendment of May 16, 1918, there was a difference of opinion as to 
the scope and application of the First Amendment guaranteeing free¬ 
dom of speech and of the press. It was not denied that the statute 
was constitutional if properly restricted. These cases will be con¬ 
sidered in a later section dealing with immunities of persons charged 
with crime. 15 

The treaty-making power and the power of Congress to enforce 
treaties by legislation was questioned in Missouri v. Holland . 16 
Great Britain and the United States had made a treaty providing for 
closed seasons and other protection for migratory birds and engag¬ 
ing to enact legislation to carry the treaty into effect. Congress 
thereafter passed the Migratory Bird Treaty Act. Missouri brought 
a bill to enjoin the federal game warden from enforcing the act and 
the authorized regulations of the Secretary of Agriculture, claiming 
that such enforcement encroached on the powers reserved to it by 
the Tenth Amendment. Mr. Justice Holmes, for an unanimous 
court, laid down that the only question was the validity of the treaty. 
“If the treaty is valid there can be no dispute about the validity of 
the statute under Article 1, Section 8, as a necessary and proper 
means to execute the powers of the Government.” The discussion 
of the specific issue before the court is prefaced by the statement: 

14 Abrams v. United States, 250 U. S. 616, 40 Sup. Ct. 17 (1919), Pierce 
v. United States, 253 U. S. 239, 40 Sup. Ct. 205 (1920), Schaefer v. United 
States, 251 U. S. 466, 40 Sup. Ct. 259 (1920). 

“For notes on Northern Pacific Ry Co. v. North Dakota, 250 U. S. 135, 
39 Sup. Ct. 502 (1919), and Dakota Central Telephone Co v. South Dakota, 
250 U. S. 163, 39 Sup. Ct. 507 (1919), holding that federal control of railroads 
under the war power precludes the operation of state rate regulations, see 19 
Cor. L. Rev. 489, 33 Harv. L. Rev. 94, 115, and 68 U. Pa. L. Rev. 68. See 
also Henry Upson Sims, “The Power of the Federal Government to Extend 
the Recent War Acts of Congress Into Times of Peace”, 5 Va. L. Rev. 87. 
For incidents of federal control of the railroads, see 20 Coeum. L. Rev. 352, 
501. For injunctions under Lever Act against the coal strike, see 5 Cornell 
L. Q. 184. 

“252 U. S. 416, 40 Sup. Ct. 382 (1920). See 20 Colum. L. Rev. 692 and 
6 Va. L. Reg. n. s. 214. For discussions prior to the decision see 8 Calif. 
L. Rev. i 77, 33 Harv. L. Rev. 281, 312, 23 Law Notes 148, 68 U. Pa. L. Rev. 
160, and 29 Yale L. J. 445. 



- 12 — 


“Acts of Congress are made the supreme law of the land 
only when made in pursuance of the Constitution, while 
treaties are declared to be so when made under the authority 
of the United States. It is open to question whether the au¬ 
thority of the United States means more than the formal acts 
prescribed to make the convention. We do not mean to imply 
that there are no qualifications to the treaty-making power; 
but they must be ascertained in a different way.” 

What this different way is is not definitely set forth, but the treaty 
in question was found to involve “a national interest of very nearly 
the first magnitude.” The inference is that the test of the validity 
of a treaty is an adequate national interest in the subject matter 
with which it deals. The fact that the states are individually in¬ 
competent to deal with the subject matter seems to be regarded as 
important. “It is not lightly to be assumed that, in matters requiring 
national action, ‘a power which must belong to and somewhere re¬ 
side in every civilized government’ is not to be found.” Then fol¬ 
lows a plea for a progressive recognition of new national needs: 

“When we are dealing with words that are also a con¬ 
stituent act, like the Constitution of the United States, we 
must realize that they have called into life a being the devel¬ 
opment of which could not have been foreseen completely by 
the most gifted of its begetters. It was enough for them to 
realize or to hope that they had created an organism; it has 
taken a century and has cost their successors much sweat and 
blood to prove that they created a nation. The case before 
us must be considered in the light of our whole experience 
and not merely in that of what was said a hundred years ago. 
The treaty in question does not contravene any prohibitory 
words to be found in the Constitution. The only question 
is whether it is forbidden by some invisible radiation from 
the general terms of the Tenth Amendment. We must con¬ 
sider what this country has become in deciding what that 
amendment has reserved.” 

The opinion makes clear that a treaty on any subject of national 
interest has nothing to fear from any reserved powers of the states. 


— 13 


Its hint that there may be no other test to be applied than whether 
the treaty has been duly concluded indicates that the court might 
hold that specific constitutional limitations in favor of individual 
liberty and property are not applicable to deprivations wrought by 
treaties. It would be going a step further to extend the same im¬ 
munity to legislation enforcing treaties. It is of course not safe to 
take expressions in a judicial opinion as the considered judgment of 
all the members of the court. Missouri’s contention in the principal 
case received the approval of Justices Pitney and Van Devanter 
who dissented, but without giving their reasons. 17 

In the endeavor to allow state workmen’s compensation laws to 
apply to injuries within the admiralty and maritime jurisdiction 
vested in the federal courts, Congress in 1917 added to the admiralty 
provision of the Judicial Code a clause saving “to claimants their 
rights and remedies under the workmen’s compensation laws of any 
state.” This provision a majority of the Supreme Court declared 
unconstitutional in Knickerbocker Ice Co. v. Stewart™ The basis 
of the decision seems to be a belief that the Constitution somehow 
adopted and established the approved rules of general maritime law 
and that such power as Congress has under the necessary and proper 

17 See a note in 29 Yale: L. J. 114 on the effect of a treaty on a state tax 
law. Articles on the League of Nations and the Constitution will be found 
in 89 Cent. L. J. 21, 70, 79, 93, 113, 226, 244, and 370. See also Edward S. 
Corwin, “The Power of Congress to Declare Peace”, 18 Mich. L. Rev. 669, 
John M. Matthews, “The League of Nations and the Constitution”, 18 Mich. 
L. Rev. 378, Albert H. Washburn, “Treaty Amendments and Reservations”, 
5 Cornell L. Q. 247, and Quincy Wright, “Treaties and the Constitutional 
Separation of Powers in the United States”, 12 Am. J. Int. Law 64, “The 
Legal Nature of Treaties”, 13 Am. J. Int. Law 706, “The Constitutionality of 
Treaties”, 13 Am. J. Int. Law 242, “Conflicts of International Law with Na¬ 
tional Laws and Ordinances”, 11 Am. J. Int. Law i, “Amendments and Res¬ 
ervations to the Treaty”, 4 Minn. L. Rev. 14, and “Validity of the Proposed 
Reservations to the Treaty”, 20 Colum. L. Rev. 121. 

“253 U. S.-, 40 Sup. Ct. 438 (1920). The majority opinion is by Mr. 

Justice McReynolds. The dissenting Justices are Holmes, Pitney, Brandeis 
and Clarke. See 8 Calif. L. Rev. 339, 20 Colum. L. Rev. 685. 18 Mich. L. 
Rev. 793, and 29 Yale L. J. 925. For discussions prior to the decision see 8 
Calif. L. Rev. 169, 5 Cornell L. Q. 275, and 4 Minn. L. Rev. 444. A few 
months before the Knickerbocker case, the Supreme Court had held that the 
amendment in question is not retroactive. Peters v. Vesey, 251 U. S. 121, 
40 Sup. Ct. 65 (1919)- See 29 Yale L. J. 363. 



14 - 


clause to add to or change the maritime law is limited to the attain¬ 
ment of the object of relieving “maritime commerce from unneces¬ 
sary burdens and disadvantages incident to discordant legislation” 
and the establishment “so far as practicable” of “harmonious and 
uniform rules applicable throughout every part of the United States.” 
Instead of doing this Congress was thought to have attempted to 
delegate its powers to the states, which under recognized principles 
it cannot do. For the minority Mr. Justice Holmes insisted that, 
since the state compensation law in question was in force when Con¬ 
gress passed the act of 1917, it should be regarded as having been 
adopted by Congress as part of the federal maritime law. He was 
further of opinion that it would not be a delegation of power to the 
states if Congress adopted in advance their future compensation 
laws, just as Congress has provided that the practice in the federal 
courts shall conform as near as may be to the practice in the state 
courts; but he thought it not necessary to go so far in order to allow 
the application of the law before the court. He denied that the Con¬ 
stitution itself adopted any maritime law by extending the federal 
judicial power to cases of admiralty and maritime jurisdiction, and 
he found no implication in the Constitution that such maritime law as 
Congress may establish must be uniform throughout the United 
States. It would be extravagant, he declared, to read into the silence 
of the Constitution “a requirement of uniformity more mechanical 
than is educed from the express requirement of equality in the Four¬ 
teenth Amendment.” 19 

The power of Congress to attach conditions to the appropriation 
of money to pay private claims raised a sharp difference of opinion 
in Calhoun v. Massie 20 The court had previously sustained a clause 
in the statute providing that not more then twenty per cent, of the 

19 For a note on Chelentis v. Luckenbach S. S. Co., 247 U. S. 372, 38 
Sup. Ct. 501 (1918), holding the common-law rules of liability inapplicable to 
an injury within the admiralty jurisdiction, see 33 Harv. L. Rev. 300, 309. 
For a note on Union Fish Co. v. Erickson, 248 U. S. 308, 39 Sup. Ct. 112 
(1919), holding a state statute of frauds inapplicable to a maritime contract, 
see 8 Caeie. L. Rev. 114. 

20 253 U. S. -, 40 Sup. Ct. 474 (1920). Justices McKenna, Van De- 

vanter, Pitney and McReynolds dissent. The same statute was declared to 
be valid in Newman v. Moyers, 252 U. S.-, 40 Sup. Ct. 478 (1920). 




“ 15 - 


money paid by the government should be paid to or received by any 
attorney on account of services rendered in connection with the 
claim. In that case 21 Mr. Justice McKenna had said that if the judg¬ 
ment of the attorney against his client sought to reach only assets 
other than those received from the Government, “the limitation in 
the act appropriating the money to 20 per cent, as the amount to be 
paid to an agent or attorney would have no application or be in¬ 
volved.” In the principal case, Calhoun who had received from the 
Government twenty per cent, of the amount awarded to his client 
Massie, sued in a state court to get an additional thirty per cent, 
under a contract made before the passage of the appropriation bill 
containing the limitation previously referred to and also this addi¬ 
tional one : 

“It shall be unlawful for any agent or agents, attorney or 
attorneys to exact, collect, withhold or receive any sum which 
in the aggregate exceeds twenty percentum of the amount of 
any item appropriated in this bill on account of services ren¬ 
dered or advances made in connection with said claim, any 
contract to the contrary notwithstanding.” 

Massie insisted that this clause protected him from paying from 
any source more than twenty per cent, of what he received from the 
government, and a majority of the Supreme Court agreed with him. 
Mr. Justice Brandeis found the clause in question so clear as to leave 
“no room for construction.” Mr. Justice McReynolds, for the 
minority, without quoting or discussing the paragraph in question, 
rebuked his colleague for not quoting or discussing the previous 
dictum of Mr. Justice McKenna by saying that “the result is neces¬ 
sarily injurious both to the court and to the public.” It is doubtful 
whether this dictum was intended, as Mr. Justice McReynolds as¬ 
sumes, to apply to the paragraph of the statute adduced by Mr. 
Massie. If it did, it is pretty obviously erroneous. The dissent is 
not confined to the question of construction, though Mr. Justice Mc¬ 
Reynolds says nothing more specific on the constitutional issue than 
to remind us that “the Fifth Amendment was intended to protect the 
individual against arbitrary exercise of federal power” and that its 


21 Capital Trust Co. v. Calhoun, 250 U. S. 208, 39 Sup. Ct. 486 (1919). 



—16 — 


‘‘inhibition protects every man in his right to engage in honest and 
useful work for compensation. ,, His earlier mention of the fact that 
the contract in question was made prior to the statute regulating the 
fee to be charged leaves it doubtful whether his dissent would 
apply to such a regulation that is wholly prospective. He rests his 
objections wholly on grounds of due process, without touching on 
the possible point that the regulation of private contracts goes be¬ 
yond the field of federal power and poaches on the reserved preserves 
of the states. For the majority, Mr. Justice Brandeis posits the con¬ 
stitutionality of the statute on the fact that the appropriation to pay 
the claim is a condition precedent to liability on the part of the client 
to the attorney. Calhoun’s chance to get anything is dependent on 
congressional grace or favor. Therefore the favor may be extended 
on terms. He has no constitutional right to bite the hand which 
feeds him. Since he undertook to get his client’s claim approved 
by the government, his assent to the terms under which the approval 
was given may be implied. He is also estopped from repudiating 
the statute after he has received his authorized twenty per cent, under 
it. Of these “special reasons”, Mr. Justice McReynolds says that 
one “can only serve to mislead” and the other “lacks substance and 
can serve no good purpose”. Both, he insists, assume the construc¬ 
tion and the constitutionality of the statute. Cases cited in the ma¬ 
jority opinion “as authority for such oppressive legislation” are said 
to “give it no support,” and it is pointed out wherein the statutes 
therein sustained stop short of the one before the court. Mr. Justice 
McReynolds takes much more pains to prove Mr. Justice Brandeis 
wrong than to prove himself right. His peppery opinion gives in¬ 
teresting evidence of the human factors that enter into the solution 
of constitutional issues. 

In Enrien v. United States 22 the answer to an interesting constitu¬ 
tional question is assumed without discussion or citation of au¬ 
thority. The Enabling Act under which New Mexico was admitted 
to the Union granted the new state certain public lands on specified 
trusts. The state later proposed to spend three per cent, of the pro¬ 
ceeds from the sale of the lands in advertising the advantages of the 
state as a place to live in. The District Court thought this a wise 


21 251 U. S. 41, 40 Sup. Ct. 75 (1919). 



— 17 - 


administration of the trust as it tended to enhance the price of the 
lands. This, the Supreme Court did not deny, but it held neverthe¬ 
less that the United States as grantor might, as it did, reserve con¬ 
trol over the matter and exact the performance of the conditions on 
which the lands were given and held. This case, like the preceding 
one, illustrates the power of the United States to keep a string 
attached to its grants and to continue to pull the string even though 
all but the string has passed from its control. In this respect the case 
differs from stipulations in enabling acts which seek to continue 
control over the public, governmental powers of states admitted 
thereunder. 23 

The other cases on national power are of minor importance, with 
the exception of those involving questions of taxation and of com¬ 
merce which will be treated in succeeding sections. National con¬ 
trol over the Indians, was sustained in two decisions. United States 
v. Board of Commissioners 24 sanctioned the authority of the United 
States, as guardian of the Indians to bring a suit in the federal courts 
to protect lands owned by non-competent Indians from illegal state 
taxes. The fact that the lands were taxable by the state after proper 
assessment was held insufficient to deprive the United States of its 
duty and right to ensure that its wards are not illegally deprived of 
the property rights previously conferred upon them. This same 
benevolent guardianship of the Indians arose also in Nadeau v. Union 
Pacific R. Co., 25 which affirmed a grant to a railroad in 1862 of a 
four hundred foot strip of land through an Indian reservation. The 
tract was said to be “part of the domain held by the tribe under the 
ordinary Indian claim—the right of possession and occupancy—with 
fee in the United States.” On the authority of earlier decisions it 
was declared that “the power of the United States, as guardian for 
the Indians, to legislate in respect to such lands is settled.” Patents 
issued subsequent to the grant to the railroad, without expressly re¬ 
serving a right of way to the road, were held to give no rights to the 
strip in question. Any claim based on occupancy or possession was 

23 See Coyle v. Smith, 221 U. S. 559, 3* Sup. Ct. 688 (1911). For an article 
bearing on the general question involved in the Ervien case, see Andrew A. 
Bruce, “State Socialism and the School Land Grants”, 33 Harv. L. Rev. 401. 

24 251 U. S. 128, 40 Sup. Ct. 100 (1919). 

“253 U. S.-, 40 Sup. Ct. 570 (1920). 





i8 — 


said to be precluded by earlier decisions. Mr. Justice Clarke dis¬ 
sented, and Justices Holmes, Pitney and Brandeis did not sit. 

While it is not clear that any constitutional issue was directly in¬ 
volved in Burnap v. United States, 26 Mr. Justice Brandeis in the 
course of the opinion pointed out that Congress might invest the 
appointment of inferior officers either in the President alone, in the 
courts of law, or in the heads of departments. The power to remove 
was declared to be, “in the absence of statutory provision to the con¬ 
trary, an incident of the power to appoint.” The term “head of a 
department”, as used in the statute, was said to mean “the Secretary 
in charge of a great division of the executive branch of the govern¬ 
ment, like the State, Treasury, and War, who is a member of the 
Cabinet”, and not to “include heads of bureaus of lesser divisions.” 27 

Another case involving the application of an uncontested constitu¬ 
tional principle is Evans v. National Bank of Savannah. 2 * It was 
agreed that the powers of a national bank in respect to discounts and 
the rate to be charged is subject to the control of Congress and not 
of the states. But Congress had prescribed that the rate to be 
charged should be that “allowed by the laws of the state or territory 
where the bank is located, and no more.” The application of this 
provision to the case at bar depended updn a combination of ele¬ 
mentary mathematics and advanced jurisprudence. The Georgia 
statute forbade a rate of interest in excess of eight per cent, “either 
directly or indirectly by way of commission for advances.” The 
Georgia supreme court held that eight per cent, discount charged in 
advance was more than eight per cent, interest. Mr. Justice Pitney 
for himself and Justices Brandeis and Clarke agreed. He insisted 
that “the laws of the state” as used by Congress meant not merely 
the words of particular sections of state statutes, but “all applicable 
provisions of the statutes as interpreted and construed by the de¬ 
cisions of the court of last resort” of the state. Mr. Justice McRey- 
nolds, for the majority, did not specifically controvert these positions, 
but he relied on the rule of the federal courts that it is not usurious 

26 252 U. S. 512, 40 Sup. Ct. 374 (1920). 

27 For a discussion of the President’s power of removal, see Thomas Reed 
Powell, “The President’s Veto of the Budget Bill”, 9 Nat. Mun. Rev. 538. 

28 251 U. S. 108, 40 Sup. Ct. 58 (1919). See 33 Harv. L. Rev. 725, 18 
Mich. L. Rev. 345, and 29 Yaee L. J. 457. 



— 1 9 


to collect the highest rate of legal interest at the time the loan is 
made, and insisted that the power given to national banks to discount 
notes includes “the power, which banks generally exercise, of dis¬ 
counting notes reserving charges at the highest rate permitted for 
interest/’ He looked to the state law only for the rate, and to the 
national law for the definition of usury. 29 

II. Regulation oe Commerce 
i. Power of Congress 

The extensive power of Congress over foreign commerce finds 
illustration in Strathearn S. S. Co. v. Dillon. 30 This sustained a pro¬ 
vision in the Seamen’s Act which, as interpreted, entitles any seaman 
shipping in foreign ports on foreign ships to disregard contracts 
postponing payment of wages until the end of the voyage and to 
demand at any American port one-half the wages earned to date. 
If the demand is not complied with, the seaman may sue in a federal 
district court for the entire wages then earned. Most of the opinion 
of Mr. Justice Day deals with the question of interpretation. The 
shipping company, backed by the British Embassy, urged that the 
Act should be limited to American seamen; but the court adduced 
against them the plain language of the statute and the further con¬ 
sideration that such “construction would have a tendency to prevent 
the employment of American seamen, and to promote the engage- 

29 For a note on the power of a national bank to manage a railroad, see 
33 Harv. L. Rev. 718, 726. See also Randall J. LeBoeuf, “National Banks as 
Fiduciaries in New York”, 5 Cornell L. Q. 128, and Walter Wyatt, “Fiduciary 
Powers of National Banks”, 6 Va. L. Rev. 301. 

For a discussion of the national postal power, see Robert E. Cushman, 
“National Police Power Under the Postal Clause of the Constitution”, 4 
Minn L. Rev. 402. 

Consideration of the power of the national government over aliens will 
be found in Howard L. Bevis, “The Deportation of Aliens”, 68 U. Pa. L. Rev. 
97, and notes in 20 Colum. L. Rev. 680, 18 Mich. L. Rev. 422, 6 Va. L. Rev. 
201, and 29 Yale L. J. 561. The right of aliens to take real property is dis¬ 
cussed in 5 Cornell L. Q. 209. 

80 253 U. S. 348, 40 Sup. Ct. 350 (1920). The case is followed in Thomp¬ 
son v. Lucas (The Westmeath), 253 U. S. 358, 40 Sup. Ct. 353 (1920). See 
20 Colum. L. Rev. 479, and for comment prior to the decision, 20 Colum. 
L. Rev. 207. 



— 20 — 


ment of those who were not entitled to sue for one-half wages under 
the provisions of the law” and thus defeat the purpose of Congress 
in passing it. The constitutional issue involved was declared to have 
been settled by an earlier case 31 in which the conclusion was “reached 
that the jurisdiction of this government over foreign merchant ves¬ 
sels in our ports was such as to give authority to Congress to make 
provisions of the character now under consideration; that it was for 
this government to determine upon what terms and conditions ves¬ 
sels of other countries might be permitted to enter our harbors, and 
to impose conditions upon the shipment of sailors in our own ports 
and make them applicable to foreign as well as domestic vessels.” 
From this it seems that ships which wish to enter our ports must be¬ 
have according to our taste on the high seas and in their home ports. 

Board of Public Utility Commissioners v. Ynchausti & Co ? 2 found 
no denial of due process of law in an order of the Philippine Board 
of Public Utility Commissioners requiring the free carriage of mails 
as a condition of granting to vessels a permit to engage in the coast¬ 
wise trade. The case was said to depend entirely upon the power to 
limit the coastwise trade. This was found to be plenary. Hence it 
was assumed to follow inevitably that no condition attached to a 
grant could deny due process of law. There is a hint in the opinion 
of the Chief Justice that the doctrine of the case is limited to legisla¬ 
tion for “territory not forming part of the United States because not 
incorporated therein” under the principles of the Insular Cases; but 
the hint is back-handed and, in view of the frequent declarations of 
the complete power of Congress over foreign commerce, it must be 
doubted whether any distinction would be made in favor of ships 
engaged in that commerce. Yet plainly the opinion leaves room for 
a different attitude towards a congressional regulation of the inter¬ 
state coasting trade. The order was questioned under the due-pro¬ 
cess clause of the Philippine Bill of Rights, which, it was recognized, 
was intended by Congress to have in the Philippines the settled con¬ 
struction that similar clauses receive in the United States. Yet it 
was added that the “result of their application must depend upon the 

31 Patterson v. Bark Eudora, 190 U. S. 169, 23 Sup. Ct. 821 (1903). 

3J 25i U. S. 401, 40 Sup. Ct. 277 (1920). 



— 21 — 


nature and character of the powers conferred by Congress upon the 
government of the Islands.” 

The so-called Reed Amendment which had been sustained in an 
earlier case, 33 came before the court again in United States v. 
Simpson, 3 * in which a person who transported five gallons of whiskey 
in his own automobile sought to escape from the toils of the statute. 
Mr. Justiice Clarke in dissenting insisted that “interstate commerce, 
in the constitutional sense, is defined to mean commercial, business, 
intercourse” and especially “the exchange, buying or selling of com¬ 
modities, of merchandise, on a large scale between the inhabitants 
of different states.” He thought that liquor purchased by a man 
for his personal use and transported by him in a private vehicle was 
“withdrawn from trade or commerce as thus defined”, and that at 
the time when the Reed Amendment was enacted Congress had no 
power to deal with Mr. Simpson on such a frolic of his own. “The 
grant of power to Congress is over Commerce,—not over isolated 
movements of small amounts of private property, by private persons 
for their personal use.” The rest of the court contented themselves 
with asserting, through Mr. Justice Van Devanter, that the introduc¬ 
tion of intoxicating liquor across state lines into forbidden territory 
“could be effected only through transportation, and whether this took 
one form or another it was transportation in interstate commerce.” 
In refusing to restrict the natural meaning of the words of the 
statute, Mr. Justice Van Devanter pointed out that the law would 
not be of much practical benefit if its purpose could be frustrated by 
transportation in automobiles. Mr. Justice Clarke in his dissent said 
he thought that the Hill case was wrongly decided. Mr. Justice Mc- 
Reynolds who had dissented with him in the Hill case concurred 
in this. 

Three prosecutions under the Sherman Anti-trust Taw turned 
wholly on the question whether there had been restraint of trade, it 
being assumed that the trade involved was interstate commerce. 35 

33 United States v. Hill, 248 U. S. 420, 39 Sup. Ct. 143 (1919). 

34 252 U. S. 465, 40 Sup. Ct. 364 (1920). See 26 W. Va. L. Q. 73 , and 29 
Yale L. J. 922. For a general article see Lindsay Rogers, “ ‘Life, Liberty, 
and Liquor’: A Note on the Police Power”, 6 Va. L. Rev. 156. 

35 In United States v. United States Steel Corporation, 251 U. S. 417, 40 
Sup. Ct. 293 (1920), the acts charged were regarded by four judges as not 



— 22 


Blumenstock Brothers Advertising Agency v. Curtis Publishing 
Co ., 36 however, turned on a construction of the commerce clause. 
This was a suit for triple damages under the Sherman Act, based 
on the refusal of the defendant to accept advertising from the plain¬ 
tiff unless the plaintiff would accede to the defendant’s conditions as 
to advertising in rival publications. The court held that the complaint 
did not state a cause of action, since the contracts for advertising 
were not interstate commerce. Mr. Justice Day’s reference to cases 
on insurance carries the implication that advertising is not commerce, 
but this is not explicitly stated, and the case is direct authority only 
on the question whether the contracts or commerce in question were 
interstate. In answering this in the negative, Mr. Justice Day said 
that “the advertising contracts did not involve any movement of 
goods or merchandise in interstate commerce or any transmission of 
intelligence in such commerce.” The circulation of the journals in 
interstate commerce was thought not to “depend upon or have any 
direct relation to the advertising contract.” The case was said to 

within the statute. Justices Day, Pitney, and Clarke dissented, and Justices 
McReynolds and Brandeis did not sit, so that a minority of the full bench 
was sufficient to give the defendant a clean bill of health. See 20 Colum. 
L. Rev. 462, and 33 Harv. L. Rev. 964, 986. In United States v. Reading Co., 

253 U. S.-, 40 Sup. Ct. 425 (1920), the three judges who dissented in the 

Steel case joined with Justices McKenna, McReynolds and Brandeis in finding 
the defendant guilty of an illegal monopoly under the Act. The Chief Justice 
and Justices Holmes and Van Devanter dissented. In United States v. A. 
Schrader’s Son, 252 U. S. 85, 40 Sup. Ct. 251 (1920), the making of agree¬ 
ments by manufacturers with retailers for the purpose of maintaining resale 
prices were held to be an unlawful restraint of trade. Mr. Justice Clarke 
confined his concurrence to the result, and Justices Holmes and Brandeis dis¬ 
sented. See 33 Harv. L. Rev. 966 , 986, 18 Mich. L. Rev. 556, and 29 Yaee 
L. J. 696. The Schrader case was distinguished from United States v. Col¬ 
gate & Co., 250 U. S. 300, 39 Sup. Ct. 465 (1919), decided the preceding term, 
on the ground that in the Colgate case there were no definite contracts for re¬ 
sale price maintenance. For notes on the Colgate case see 5 Cornell L. Q. 
100 and 29 Yaee L. J. 365. For other notes on cases on unfair competition 
and restraint of trade see 20 Colum. L,. Rev. 328, 5 CornEEE L. Q. 323, 33 
Harv. L. Rev. 320, 617, 18 Mich. L. Rev. 71, and 29 Yale L. J. 125. See also 
Charles Grove Haines, “Efforts to Define Unfair Competition”, 29 Yale L. J. 
1, and William Notz, “The Webb-Pomerene Law—Extraterritorial Scope of 
the Unfair Competition Clause”, 29 Yale L. J. 29. 

36 252 U. S. 436, 40 Sup. Ct. 385 (1920). 



23 — 


be wholly unlike one involving a correspondence school 37 “wherein 
there was a continuous interstate traffic in text-books and apparatus 
for a course of study pursued by interstate commerce”, and more like 
the cases holding that insurance is not commerce and a case 38 in 
which the court was said to have held that “a broker engaged in 
negotiating sales between residents of Tennessee and non-resident 
merchants of goods situated in another state was not engaged in 
interstate commerce .” 39 

The general terms of the federal Employers’ Liability Law con¬ 
tain no specifications as to when injured employees are engaged in 


37 International Text-book Co. v. Pigg, 217 U. S. 91, 30 Sup. Ct. 481 (1910). 

38 Ficklen v. Shelby County, 145 U. S. 1, 12 Sup. Ct. 810 (1892). This 
case did not, when decided, proceed on any theory that the broker was not 
engaged in interstate commerce. It sustained a license on the privilege of 
doing a general business which included intra-state as well as interstate com¬ 
merce. The fact that the broker asked for a license which included intra¬ 
state business was regarded as controlling. The difficulty of sustaining the 
case on the theory adduced in the opinion has led the court lately to slide it 
over the ground that the nature of the brokerage business is one degree re¬ 
moved from interstate commerce. 

39 An interesting case under the Federal Trade Commission Act of 1914 

is Federal Trade Commission v. Gratz, 252 U. S.-, 40 Sup. Ct. 572 (1920). 

The Commission after notice and hearing had ordered Gratz to desist from 
refusing to sell ties for cotton bales unless the purchaser bought bagging 
at the same time. Under the provisions of the statute the defendant applied 
to the Circuit Court of Appeals to set aside the order of the Commission. The 
petition was granted for the reason given that the evidence failed to show 
that the practice complained of was general and that the Commission had not 
jurisdiction to determine the merits of specific individual grievances. The 
opinion of the Supreme Court, by Mr. Justice McReynolds, sustains the dis¬ 
missal of the order of the Commission, on the ground that the complaint 
issued by the Commission fails to state facts sufficient to show that the de¬ 
fendant’s refusal to sell ties without bagging is unfair or detrimental to the 
public interest. Mr. Justice Brandeis, in dissenting, insisted that the complaint 
filed by the Commission was sufficient though in general terms, that the Com¬ 
mission is vested with power to forbid “unfair methods” of competition be¬ 
fore those methods become established as a general practice, that the Circuit 
Court of Appeals had found that the specific facts charged were supported 
by the evidence, and that these facts included sufficient evidence of a dom¬ 
inating position enjoyed by the defendants so that it was not unreasonable 
for the Commission to find that the methods used amounted to “unfair com¬ 
petition.” Mr. Justice Clarke joined in the dissent. Mr. Justice Pitney con¬ 
fined his concurrence to the result. See 20 Coe. L. Rev. 806. 




- 24 - 


interstate commerce so as to come within the Act. This is left to 
the courts in each individual case. The issue is not the constitution¬ 
ality of the statute but the constitutionality of its application to a 
particular state of facts. In four cases during the past term the 
employee was held to have been engaged in interstate commerce at 
the time of his injury. The test applied is whether the work being 
done is so closely related to interstate commerce as to be practically 
a part of it. Brie R. Co. v. Collins*° involved an employee who 
operated a signal tower and water tank, both accessory to the opera¬ 
tion of interstate trains. He was hurt by an explosion of the gaso¬ 
line tank for the pump for the water tank. Brie R. Co. v. Szary 41 
involved an employee whose job was to dry sand for use in engines 
some of which were used in interstate commerce. After sanding some 
engines destined for other states, he emptied the ashes from the 
stove, took them in a pail across the tracks to the ash pit, emptied 
the pail, got a drink of water at the engine house, was hit by an 
engine when crossing the track again to get the pail. In these two 
cases suit had been brought under the federal law, so the employee 
guessed right. Justices Van Devanter and Pitney dissented in both 
cases. In the next two cases the employee sought to come within 
state compensation acts and got his award only to have the Supreme 
Court set it aside and hold he should have sued under the federal 
law. Mr. Justice Clarke dissented in both cases. In Southern Pacific 
Co. v. Industrial Accident Commission 42 the deceased was killed 
while wiping insulators supporting a wire carrying power then used 
in the propulsion of interstate trains. In Philadelphia & Reading 
R. Co. v. Hancock 43 the accident occurred to one aiding in transport¬ 
ing from the coal mines a train of cars some of which were destined 
for other states. The court held that the interstate transportation 
had already begun, though the crew to which plaintiff belonged took 
them only to the yard, from which they were taken by another crew 
to scales ten miles away, after which they were first billed to extra¬ 
state consignees. But the shipping clerk at the mine designated the 

40 253 U. S. -, 40 Sup. Ct. 450 (1920). 

"253 U. S.-, 40 Sup. Ct. 454 (1920). 

"251 U. S. 259, 40 Sup. Ct. 130 (1920). 

43 253 U. S.-, 40 Sup. Ct. 512 (1920). 

\ 




— 25 — 


particular cars that were to go outside the state, and the freight 
charges were through rates from the mine to the ultimate destina¬ 
tion . 44 

In New York Central R. Co. v. Mohney 45 the question was 
whether a release of liability contained in a pass should be governed 
by the state or federal law. This was thought to depend on the ques¬ 
tion whether the passenger was on a local or interstate journey when 
the injury occurred, but the character of the journey was determined 
by the character of the pass on which the plaintiff was travelling. 
The pass was good only between two points within Ohio. Plaintiff 
intended to pay his fare from the second Ohio city to a third, where 
he was to get a promised pass good from there to his ultimate des¬ 
tination in Pennsylvania. Justices Day and Van Devanter thought 
that under the facts he was on an interstate journey when injured on 
the first stretch. But Mr. Justice Clarke, for the majority, held that 
the contract must govern and not the intention of the traveller. As 
the only contract he had was a pass between two local points, he was 
on a local journey. “The mental purpose of one of the parties to a 
written contract cannot change its terms.” The application of the 
decision is doubtless limited to the particular issue before the court, 
since it was declared that the written contract of release on the pass 
was the only reliance of the defendant . 46 

44 In Hull v. Philadelphia & Reading Ry. Co., 252 U. S. 475, 40 Sup. Ct. 
358 (1920), an agreement between two connecting railroads that each might 
run trains manned by its crews over the line of the other and that each would 
be responsible for all accidents on its own line was held not to make a person 
hired by one road an employee of the other when on its line so as to be able 
to sue the latter under the Employers’ Liability Law. Mr. Justice Clarke dis¬ 
sented. See 20 Colum. L. Rev. 709. 

In 19 Coeum. L. Rev. 395 is a note to Kinzell v. Chicago, M. & St. P. Ry. 
Co., 250 U. S. 130, 39 Sup. Ct. 412 (1919), and Philadelphia, B. & W. R. Co. 
v. Smith, 250 U. S. 101, 39 Sup. Ct. 396 (1919), two cases decided during the 
October, 1918, term, and holding employees within the federal Employers’ 
Liability Law. The latter case is also commented on in 6 Va. L. Rev. 66. 
See 68 U. Pa. L. Rev. 372 for a note on the “Nature of the Services of a Flag¬ 
man at a Crossing Under the Federal Employers’ Liability Act.” 

45 252 U. S. 152, 40 Sup. Ct. 287 (1920). See 29 Yale L. J. 803. 

46 In Fort Smith & W. R. Co. v. Mills, 253 U. S. -, 40 Sup. Ct. 526 

(1920), the Adamson Law was held not to apply to an insolvent railroad in 
the hands of a receiver which had a wage agreement with its employees who 



— 26 — 


2. State Police Power and Interstate Commerce 

The last three cases, which for convenience were included under 
the head of the power of Congress, belong technically in the group 
now being considered. The question in each case was whether the 
subject matter was interstate or local in character. The intra-state 
pass was held to make the journey on which it was used an intra¬ 
state journey at least for the purpose of allowing state law to control 
the effect of a stipulation in the pass against liability for injury to 
the holder. In the other two cases state compensation laws were 
held inapplicable because the injuries were found to be within the 
scope of the federal Employers’ Liability Law. State action on a 
matter normally within reserved state power was precluded because 
Congress under its commerce power had taken control of the same 
matter. The only question was whether the injuries occurred in 
local or in interstate commerce, since it had previously been settled 
that Congress had taken within its control the regulation of liability 
for all injuries to employees engaged in interstate commerce and 
that the state law could not apply to such injuries even though the 
federal law provided no remedy. It is not, however, a universal 
rule that all state action is necessarily precluded by congressional 
regulation of matters within the general field in question. If the 
state law is in conflict with the congressional prescription, it is of 

not only refrained from making any demands under the Adamson Law but 
appreciated the situation and desired to continue under the existing agreement. 

Kansas City So. Ry. v. Interstate Commerce Commission, 252 U. S. 178, 40 
Sup. Ct. 187 (1920), ordered the defendant to obey the Act of Congress in 
respect to making a physical valuation of the railroads and to ascertain the 
present cost of condemnation and damages, or of purchase in excess of the 
original cost or present value, notwithstanding the declarations of the Supreme 
Court in the Minnesota Rate Cases, 230 U. S. 352, 33 Sup. Ct. 729 (1913) that 
the estimation of such hypothetical cost was “wholly beyond reach of any 
process of rational determination”, was based on an “impossible hypothesis”, 
and would be an indulgence in “mere speculation” and “mere conjecture.” 
The court evidently assumes that the members of the commission are endowed 
with some supernatural powers which mere judges lack. 

For articles on federal control of the railroads, see J. A. Fowler, “Federal 
Power to Own and Operate Railroads in Peace Time”, 33 Harv. L. Rev. 775, 
Gerard C. Henderson, “Railway Valuation and the Courts”, 33 Harv. L. Rev. 
902, 1031, and Fordney Johnston, “The Transportation Act, 1920”, 6 Va. 
L. Rev. 482. 



— 27 — 


course inapplicable. Where the two are not in conflict, the question 
is whether Congress has meant to cover the whole field or only that 
part it has specifically dealt with. This was the issue in three cases 
decided during the last term. 

Pennsylvania R. Co. v. Public Service Commission 47 had before it 
the question whether a state statute requiring a platform and guard 
rails on the rear end of the last car of trains was precluded by any 
federal regulation. The car which violated the state statute was a 
mail car. Mr. Justice Holmes said that the federal rules for the 
construction of mail cars not only exclude the platform required by 
the state but provide an equipment for them when used as end cars. 
They also provide for caboose cars without such platforms as the 
state requires. Since caboose cars are constantly used as end cars, 
the federal law makes lawful such an end car as the state law for¬ 
bids. Mr. Justice Clarke, who alone dissented, looked at the state 
order as directed at trains rather than at individual cars. He found 
no evidence that the Interstate Commerce Commission had pre¬ 
scribed how trains should be made up or what sort of cars should 
be put at the end. Caboose cars are commonly attached to slow- 
moving freight trains, not to fast-moving express and mail trains. 
No federal requirement would be interfered with if the railroad 
carried at the end of its trains the kind of car demanded by the state. 
The federal rules have a different purpose and therefore have not 
occupied the whole field of the regulation of trains. But eight mem¬ 
bers of the court thought otherwise. 

In two unanimous decisions it was laid down that Congress had 
so far taken over the regulation of interstate telegraphic communica¬ 
tion as to preclude the application of state laws on matters allowed 
to be within state control until Congress acts. Postal Telegraph- 
Cable Co. v. Warren-Godwin Lumber Co . 48 negatived the applica¬ 
tion of the Mississippi doctrine that a stipulation limiting liability for 

47 250 U. S. 566, 40 Sup. Ct. 36 (1919). See 5 Va. L. Reg. n. s. 719, and 
29 Yale L. J. 45b. 

48 251 U. S. 27, 40 Sup. Ct. 69 (1919). See 33 Harv. L. Rev. 988, 14 III. 
L. Rev. 525, 5 Iowa L. B. 280, 18 Mich. L. Rev. 418, 4 Minn. L. Rev. 293, 
U. Pa. L. Rev. 259, and 29 Yale L. J. 566. For discussions prior to the de¬ 
cision see W. M. Williams, “Applicability of the Interstate Commerce Act to 
Telegraph Companies”, 90 Cent. L. J. 370, and notes in 18 Colum. L. Rev 
612, and 18 Mich. L. Rev. 248. 



-28- 


error in transmitting an unrepeated message is void as one limiting 
liability for negligence, and held the contract governed by the con¬ 
trary rule obtaining in the federal courts. Western Union Telegraph 
Co. v. Boegli 40 saved the company from a penalty fixed by the law 
of Indiana for failure to deliver a message promptly. The Act of 
Congress looked to in both cases for the banishment of state author¬ 
ity was the 1910 Amendment to the Interstate Commerce Act. This 
allows telegraph companies to establish reasonable rates subject to 
the control of the Interstate Commerce Commission, requires their 
rates to be equal and uniform, and permits the classification of mes¬ 
sages into day, night, repeated, unrepeated, etc., with different rates 
for each class. This specific authorization to vary the rates as a 
message is repeated or unrepeated was thought “unmistakably to 
draw under the federal control the very power which the construc¬ 
tion given below to the act necessarily denied.” The purpose of Con¬ 
gress in its provisions was said to be to subject interstate telegraph 
companies to a uniform national rule, and to exclude the possibility 
of applying varying state laws. The state penalty failed because the 
state law did not apply. The state rule as to the legality of the limi¬ 
tation of liability failed because, since the subject is under federal 
law, it is governed by the non-existent federal common law consist¬ 
ing of those principles of general jurisprudence which the federal 
courts modestly profess to be better able to discover than are their 
colleagues who sit in state tribunals. 50 

In the absence of congressional regulation, the states are allowed 
to regulate such interstate commerce as is not “national in character.” 
Only over such commerce as is thought to require uniformity of 
regulation throughout the country is the mere grant to Congress re¬ 
garded as a grant of the whole power and therefore a prohibition on 
the states. *And interstate commerce, even though “national in 
character” and hence such as to require uniformity of regulation, 
may still be subjected to state requirements in minor matters, pro¬ 
vided Congress has not passed inconsistent regulations or taken the 
whole field within its control. Reiterated formulae as to the ex- 

49 251 U. S. 315. 40 Sup. Ct. 167 (1920). 

60 For notes on the law governing telegraph messages between two points 
within the same state but routed partly through another state, see 18 Mich. 
L. Rev. 559 and 4 Minn. L. Rev. 295. 



— 29 — 


elusiveness of congressional power over such commerce are saved 
from formal impairment by saying that the state requirements which 
are sanctioned do not “regulate” interstate commerce, but merely “in¬ 
cidentally affect” it. Thus “regulate” becomes a word of art which 
applies, not to all that regulates in fact, but only to that which regu¬ 
lates too much or in some disapproved way. The cases decided dur¬ 
ing the past term afford two rather striking instances of this tolerant 
attitude towards state laws thought merely to affect interstate com¬ 
merce incidentally without regulating it. 

Pennsylvania Gas Co. v. Public Service Commission, 51 allowed the 
New York Public Service Commission to prescribe the rates for 
natural gas piped from Pennsylvania and furnished to consumers of 
a New York municipality. There was no break in the continuity of 
the transmission, as there had been in some previous cases, and the 
court was clear that such commerce is interstate and that the local 
rates may affect the interstate business of the company. But the 
service which was rendered was said to be essentially local, and not 
one that requires general and uniform regulation of rates by con¬ 
gressional action. Obviously the deciding factor in the case is a 
judgment that it is better for the rates to be regulated than for the 
monopoly to demand what it pleases, and that any interference with 
the freedom of interstate commerce is the lesser of two evils and one 
readily obviated by national action whenever Congress sees fit. 52 

South Covington & Cincinnati St. Ry. Co. v. Kentucky 53 allowed 
a state Jim Crow car law to apply to an interurban street railway 
company though eighty per cent, of its traffic was interstate. Mr. 
Justice Day wrote a dissenting opinion which was concurred in by 
Justices Van Devanter and Pitney. This pointed out that Ohio, 
across the river, forbade the separation of passengers according to 

”252 U. S. 23, 40 Sup. Ct. 279 (1920). See 68 U. Pa. L. Rev. 393 and 29 
Yale L. J. 926. 

" For discussions of an important issue soon to reach the Supreme Court, 
see Fred O. Blue, “Has the Legislature the Power to Restrict the Sale of the 
State’s Natural Products Into Other States?”, 90 Cent. L. J. 154, and Thomas 
Porter Hardman, “The Right of a State to Restrain the Exportation of Its 
Natural Resources”, 26 Va. L. Q. i, 224. 

88 252 U. S. 399, 40 Sup. Ct. 378 (1920). The same point is affirmed in 
Cincinnati, C. & E. Ry. Co. v. Kentucky, 252 U. S. 408, 40 Sup. Ct. 381 (1920). 
See 18 Mich. L. Rev. 791. 



I 


— 30 - 

complexion, and that to comply with the Kentucky law the company 
would have to attach an extra car for the six-mile journey in Ken¬ 
tucky. As not over six per cent, of the passengers were colored and 
on many trips there were no colored passengers at all, the attachment 
of this extra car was thought to be an unreasonable burden on inter¬ 
state commerce both in respect to cost and in the practical operation 
of the traffic. For the majority Mr. Justice McKenna declared that 
“the regulation of the act affects interstate business incidentally and 
does not subject it to unreasonable demands.” He also relied on the 
fact that the Kentucky part of the line was separately owned by a 
Kentucky corporation which, he said, should not be permitted to 
escape its obligations to the state by running its coaches beyond the 
state line. But Mr. Justice Day answered that this Kentucky com¬ 
pany owned no cars and conducted no operations and that its stock 
was entirely owned by the defendant company whose business was 
preponderantly interstate. Mr. Justice McKenna, for the majority, 
spoke of “the equal necessity, under our system of government, to 
preserve the powers of the states within their sovereignties as to 
prevent the power from intrusive exercise within the national sov¬ 
ereignty,” but he did not mention a regard for certain strongly-held 
sentiments which may have influenced the favor shown to the state. 
It would not be safe to rely on the case as authority for equally great 
burdens imposed from other motives. 54 

3. State Taxation and Interstate Commerce 

The recently developed doctrine that the inclusion of extra-terri¬ 
torial values in the assessment of an excise on the local business of 
foreign corporations doing both local and interstate commerce makes 
the exaction an invalid regulation of interstate commerce and a 
taking of property without due process of law finds expression in 
Wallace v. Hines.™ The case sustained a preliminary injunction 
against a North Dakota excise imposed by a statute under which 

“For other discussions of state police power in relation to interstate 
commerce, see Kenneth F. Burgess, “New Limitations Upon State Regulations 
of Rates”, 20 Coujm. L. Rev. 660, Julius Henry Cohen, “The New York 
Harbor Problem in Its Legal Aspects”, 5 Cornell L. Q. 373, and notes in 33 
Harv. L. Rev. 292, 312, on state control over interstate bridges. 

“253 U. S. -, 40 Sup. Ct. 435 (1920). 




3i — 


“the tax commissioner fixes the value of the total property of each 
railroad by the total value of its stocks and bonds and assesses the 
proportion of this value that the main track mileage in North Dakota 
bears to the main track of the whole line.” The mileage ratio was 
declared indefensible both because the physical value of a mile of 
track over the North Dakota plains is worth less than that of a mile 
in more mountainous and more populous states and because the road 
in question had valuable terminals and other property in other states 
with no corresponding assets and facilities in North Dakota. Mr. 
Justice Holmes puts the principle of the case as follows: 

“The only reason for allowing a State to look beyond its 
borders when it taxes the property of foreign corporations is 
that it may get the true value of the things within it, when they 
are part of an organic system of wide extent, that gives them a 
value above what they otherwise would possess. The purpose 
is not to expose the heel of the system to a mortal dart—not, in 
other words, to open to taxation what is not within the State. 
Therefore no property of such an interstate road situated else¬ 
where can be taken into account unless it can be seen in some 
plain and fairly intelligible way that it adds to the value of the 
road and the rights exercised in the State. Hence the posses¬ 
sion of bonds secured by mortgage of lands in other States, or 
of a land-grant in another State or of other property that adds 
to the riches of the corporation but does not affect the North 
Dakota part of the road is no sufficient ground for the increase 
of the tax—whatever it may be—whether a tax on property, or, 
as here, an excise upon doing business in the State.” 

Two divergent cases on occupation taxes imposed on those sell¬ 
ing within the state goods of extra-state origin still in the original 
package show how fine a line can be drawn between vice and virtue. 
Wagner v. Covington 56 presented the familiar distinction between 
sales by peddlfers and sales by drummers. An Ohio bottler of soft 
drinks with a regular line of customers in Covington, Kentucky, was 
subjected to a license tax on wholesalers. Some of his deliveries 
were in response to previous specific orders. For these the Ken¬ 
tucky court had held him not taxable. The rest were the result of 

*251 U. S. 95, 40 Sup. Ct. 93 (1919)- See 6 Va. L. Rev. 378. 



3 ~ 


fairly assured expectancies, but occasionally the wagons returned 
from Kentucky to Ohio with some or all of the goods they had taken 
over to meet the hoped-for demand. Over the silent dissent of Jus¬ 
tices McKenna and Holmes, Mr. Justice Pitney for the majority 
declared: 

“Of course the transportation of plaintiffs’ goods across the 
state line is of itself interstate commerce; but it is not this that 
is taxed by the city of Covington, nor is such commerce a part 
of the business that is taxed, or anything more than a prepara¬ 
tion for it. So far as the itinerant vending is concerned, the 
goods might just as well have been manufactured within the 
state of Kentucky; to the extent that plaintiffs dispose of their 
goods in that kind of sales, they make them the subject of local 
commerce; and, this being so, they can claim no immunity from 
local regulation, whether the goods remain in the original pack¬ 
ages or not.” 

The previous peddler cases sustaining taxes on sales of goods 
which, so far as appears, were still in the original packages in which 
they came from other states, make us curious to know why Justices 
McKenna and Holmes dissented. The provisions of the ordinance 
are not set forth in the majority opinion, and it may be that the dis¬ 
sentients did not agree that its general language was properly sep¬ 
arable into an invalid tax on concededly interstate sales and a valid 
tax on those made in Kentucky without prior assured orders. Or 
they may have thought that the regular and continuous business of 
supplying the recurring and fairly certain demands of retailers is 
substantially different from the casual and precarious peddling here¬ 
tofore held not interstate commerce. 

That it was the itinerant character of the vending that put it with¬ 
in the grasp of the state seems fairly clear from the unanimous 
decision in Askren v. Continental Oil Co . 57 four months later. This 
held a state license tax inapplicable to sales of gasoline in the barrels 
in which they had come from another state and to sales of the whole 
contents of tank cars. Mr. Justice Day, after citing an earlier de¬ 
cision, 58 declared: 

"252 U. S. 444, 40 Sup. Ct. 355 (1920). 

68 Standard Oil Co. v. Graves, 249 U. S. 389, 39 Sup. Ct. 320 (1919). 



— 33 — 


“In that case we reaffirmed, what had often been adjudicated 
heretofore in this court, that the direct and necessary effect of 
such legislation was to impose a burden upon interstate com¬ 
merce ; that under the federal Constitution the importer of such 
products from another state into his own state for sale in the 
original packages, had a right to sell the same in such packages 
without being taxed for the privilege by taxation of the sort here 
involved. Upon this branch of the case we deem it only neces¬ 
sary to refer to that case, and the cases therein cited, as estab¬ 
lishing the proposition that the license tax upon the sale of gaso¬ 
line brought into the state in tank cars, or original packages, and 
thus sold, is beyond the power of the state/’ 

A different attitude was taken towards that part of the business 
which was said to consist “in selling gasoline in quantities to suit 
purchasers.” Of such sales Mr. Justice Day said: 

“Much is made of the fact that New Mexico does not produce 
gasoline, and all of it that is dealt in within that state must be 
brought in from other states. But, so long as there is no dis¬ 
crimination against the products of another state, and none 
is shown from the mere fact that the gasoline is produced in 
another state, the gasoline thus stored and dealt in is not 
beyond the taxing power of the state.” 

The best reason for allowing the taxation of these sales would 
seem to be that the original package was broken to make them. But 
that is not mentioned by the court. Instead Mr. Justice Day cites 
Wagner v. Covington 59 without comment. The sales there held tax¬ 
able were in the original packages. Why should the sale of a full 
case of ginger ale be held taxable and the sale of a full barrel of 
gasoline be held not taxable? The only substantial difference be¬ 
tween the cases seems to be that the ginger ale was peddled while 
presumably the purchaser of the gasoline had to come and get it. 

In Shaffer v. Carter s * an Illinois citizen based one of his objections 

" Note 56, supra. 

60 252 U. S. 37, 40 Sup. Ct. 221 (1920). This case will be reviewed more 
at length in the section on “Taxation”, and references to discussions in law 
reviews will there be given. Mr. Justice McReynolds dissented but, as he filed 
no opinion, it cannot be known whether his dissent is based on the commerce 
clause or on the Fourteenth Amendment or on both. 



— 34 — 


to an Oklahoma tax on the net income from his Oklahoma oil wells 
on the ground that the tax was an invalid regulation of interstate 
commerce. Mr. Justice Pitney answered that the tax since it was 
not on gross receipts but only upon the net proceeds “is plainly sus- 
tainable, even if it includes net gains from interstate commerce.” 
For this he cited the case 61 sustaining the application of the Wis¬ 
consin income tax to the net income of a domestic corporation from 
business within the state. He thus makes it evident that the doctrine 
of that case is not confined to domestic corporations or to domiciled 
citizens. Whether it applies only to general state-wide income taxes 
or covers as well as a special excise on net incomes confined to cor¬ 
porations is a question now before the Supreme Court in cases con¬ 
testing the corporation income tax law of Connecticut. 62 

Thomas Reed Poweu,. 

Columbia University. 

(To be continued) 


61 United States Glue Co. v. Oak Creek, 247 U. S. 321, 38 Sup. Ct. 
399 (1918). 

6J For discussions of the Connecticut decision sustaining the tax, see 20 
Coeixm. L. Rev. 324 and 33 Harv. L. Rev. 736. 



PART II 


III. Taxation 


WO important cases sustained objections to applications of 



X the federal income tax. In each there was vigorous dis¬ 
sent. Bvans v. Gore 1 2 held that the constitutional provision that the 
federal judges shall receive “a compensation which shall not be di¬ 
minished during their continuance in office” applies to diminution 
by inclusion of that compensation in the assessment of the 
general federal tax on net income. The case at bar involved a tax 
on the 1918 compensation of a judge appointed in 1899. While not 
directly qualified by anything in the opinion, the decision would seem 
to have no application to judges appointed after the law taxing their 
income was first enacted. So also any increase in compensation 
should be subject to a tax on the books when the increase is ac¬ 
corded. There would be force in the argument that the increase 
might be accompanied by subjection to a tax on the total compen¬ 
sation, provided the net residue is greater than the salary before 
the increase. The opinion of the court pointed out that the salary 
of the President is also protected from diminution and that the tax 

1 For the preceding installment reviewing cases on Miscellaneous Na¬ 
tional Powers and Regulations of Commerce, see 19 Mich. L. Rev. 1-34 
(November, 1020). 

2 253 U. S. -, 40 Sup. Ct. 550 (1920). Mr. Justice Plolmes wrote a 

dissenting opinion in which Mr. Justice Brandeis concurred. See Edward S. 
Corwin, •‘Constitutional Law in 1919-1920,” 14 Am. Poe. Sci. Rev. 635, at pp. 
641-644, and notes in 20 Coeum. L. Rev. 794; 34 Harv. L. Rev. 70, 85; 7 Va. 
L. Rev. 69, 76; and 30 YaeE L. J. 75. For a note on the case in the court 
below, see 18 Mich. L. Rev. 697. 



— 36 — 


on the salary is a diminution thereof. This, too, should have no 
application to a president who assumes office after the income tax 
is in force. Unless, therefore, the offending provision in the in¬ 
come tax is formally repealed, it ought to be applicable to all future 
presidents and judges. It is somewhat surprising that the court 
should fail to point out this limit to the scope of the decision. Most 
of Mr. Justice Van Devanter’s opinion is a recital of the history of 
the clause in question and a dissertation on the importance of the 
independence of the judiciary. Nowhere does he directly refute the 
contention of the minority that this independence is not threatened 
by subjection to a burden that is borne equally by all citizens. 
He insists that taxation is diminution and that diminution of any 
kind is prohibited by the Constitution. The minority make two 
other points. One is that the salary had lost its identity before the 
assessment of the tax on total net income for the year. The other 
is that the Sixteenth Amendment, giving Congress power to tax 
income from whatever source derived, specifically authorizes the 
tax in question. The majority’s answer to the latter contention 
is the one previously accepted by a majority of the court in the 
Stock Dividend Case, i. e., that the Sixteenth Amendment does 
not extend the federal taxing power to new subjects, but merely 
forbids looking at the source of income to ascertain whether a 
tax thereon is in substance a direct tax. 3 4 

The Stock Dividend Case is Eisner v. Macomber* This held 


3 For articles on other problems of federal taxation see Arthur A. Ballan- 
tine, “Some Constitutional Aspects of the Excess Profits Tax”, 29 Yale L. J. 
625, Minor Bronaugh, “Regulation of Child Labor by Federal Taxation”, 23 
Law Notes 7, Robert Eugene Cushman, “The National Police Power Under 
the Taxing Clause of the Constitution”, 4 Minn. L. Rev. 247, Harry Hub¬ 
bard, “The Sixteenth Amendment”, 33 Harv. L. Rev. 794, and Noel Sargent, 
“Bills for Raising Revenue Under the Federal and State Constitutions”, 4 
Minn. L. Rev. 330. For a note on federal taxation of child labor see 6 Va. 
L. Rev. 53s. Cases holding that the federal estate tax is chargeable against 
the residuary estate and not against specific legacies are discussed in 33 
Harv. L. Rev. 323, 18 Mich. L. Rev. 161, and 29 YaeE L. J. 124. The ques¬ 
tion of statutory construction whether a state inheritance tax may be de¬ 
ducted from the assessment of the federal income tax is considered in 20 
Coi,uM. L. Rev. 229, and 30 YaeE L. J. 199. 

4 252 U. S. 189, 40 Sup. Ct. 189 (1920). See Charles E. Clark, “Eisner v. 
Macomber and Some Income Tax Problems”, 29 Yale L. J. 73 5, Edward S. 
Corwin, op. cit. 14 Am. Poe. Sct. Rev. 635, Fred R. Fairchild, “The Stock 



— 37 — 


by a five to four vote that a stock dividend is capital and not 
income. A tax thereon is therefore a direct tax which must be 
apportioned among the states according to population. Mr. 
Justice Brandeis, in a dissent concurred in by Mr. Justice Clarke, 
argued that the stock dividend is a transfer by the corporation to 
the stockholder of a different interest from that which he had be¬ 
fore and is substantially similar to a cash dividend or to a dividend 
in property such as the stock of another corporation, both of 
which had been held to be income. For the majority Mr. 
Justice Pitney distinguished these cases by saying that they 
dealt with transactions in which the stockholder got something with 
which the corporation had parted. In issuing a stock dividend, how¬ 
ever, a corporation retains all its assets. The stockholder gets none 
of them. He gets nothing but new pieces of paper which reduce the 
value of his old pieces of paper, so that the old and the new to¬ 
gether are worth no more than the old were worth before the split. 
Mr. Justice Brandeis sought also to analyze the tax on stock divi¬ 
dends as a way of looking through the corporate entity and taxing 
the stockholder on his interest in the income of the corporation, but 
postponing the tax until that corporate income takes the form of a 
stock dividend. To this, Mr. Justice Pitney retorted that, unless 
the corporation is treated as a substantial entity, separate from the 
stockholder, there is no income to the stockholder except as the 
corporation acquires it. Any payment by the corporation to the 
stockholder is merely a change of the stockholder’s money from 
one pocket to another. The argument of the government that the 
stock dividend measures the extent to which gains accumulated by 
the corporation have made the stockholder richer was answered by 

Dividend Decision”, 5 Burr. Nat. Tax Ass'n. 208, Thomas Reed Powell, 
“The Stock Dividend Decision and the Corporate Nonentity”, 5 Burr. Nat. 
Tax Ass'n. 201, “The Judicial Debate on the Taxability of Stock Dividends 
as Income”, 5 Burr. Nat. Tax Ass'n. 247, “Stock Dividends, Direct Taxes, 
and the Sixteenth Amendment”, 2c CoruM. L. Rev. 536, A. M. Sakolski, 
“Accounting Features of the Stock Dividend Decision”, 5 Burr. Nat. Tax 
Ass'n. 212, Edward H. Warren, “Taxability of Stock Dividends as Income”, 
33 Harv. L. Rev. S85, and notes in 18 Mich. L. Rev. 689, 4 Minn. L. Rev. 
462 68 U. Pa. Law Rev. 394, 6 Va. L. Reg. n. s. 220, and 29 Yate L. J. 812. 
For an article written prior to the decision and submitted to the Supreme 
Court as part of the brief for Mrs. Macomber, see Edwin R. A. Seligman, 
“Are Stock Dividends Income?” 9 Am. Ec. Rev. 517. 



- 3 §- 


saying that this would depend upon how long he had held his stock 
and that any such enrichment is merely an increase in capital in¬ 
vestment and not income. The central position of the majority is 
that separation and receipt of something are essential to income and 
that there is no separation and no receipt when the corporation 
parts with none of its assets. Mr. Justice Brandeis’s answer is 
that substantially the stock dividend is equivalent to a dividend in 
the stock of a subsidiary and to an extraordinary cash dividend 
coupled with a preferential opportunity to subscribe to a propor¬ 
tionate amount of newly issued stock, both of which have been held 
to be taxable income. Mr. Justice Holmes, in a separate dissent 
concurred in by Mr. Justice Day, concedes that on sound princi¬ 
ples a stock dividend is not income, but adds: 

“I think that the word ‘incomes’ in the Sixteenth Amend¬ 
ment should be read in ‘a sense most obvious to the common 
understanding at the time of its adoption’... .For it was 
for public adoption that it was proposed.... The known 
purpose of this amendment was to get rid of nice questions 
as to what might be direct taxes, and I cannot doubt that 
most people not lawyers would suppose when they voted for 
it that they put a question like the present to rest. I am of 
the opinion that the Amendment justifies the tax.” 5 

Complaints against state taxation fall under four main heads: 
(i) lack of jurisdiction; (2) wrongful discrimination; (3) im¬ 
proper procedure for assessment or collection; and (4) exaction 
of money for purposes not public. This classification will be fol- 

5 For decisions in suits to recover succession taxes assessed under the 
Spanish War Revenue Act. see Henry v. United States, 251 U. S. 393, 40 
Sup. Ct. 185 (1920), and Simpson v. United States, 252 U. S. 547, 40 Sup. 
Ct. 367 (1920). The question when income is received within the meaning 
of the federal Income Tax Act is considered in Maryland Casualty Co. v. 
United States, 251 U. S. 342, 40 Sup. Ct. 155 (1920). Questions of allow¬ 
able deductions under the Income Tax Act are answered in Penn Mutual 
Life Ins. Co. v. Lederer, 252 U. S. 523, 40 Sup. Ct. 397 (1920). 

For a note on United States v. Doremus, 249 U. S. 86, 39 Sup. Ct. 214 
(1919) which sustained the Harrison Narcotic Drug Act, see 6 Va. L. Rev. 
535. Crocker v. Malley, 249 U. S. 223, 39 Sup. Ct. 270 (1919), dealing with 
the assessment of the federal income tax on Massachusetts real estate trusts, 
is considered in 33 Harv. L. Rev. 118. 



— 39 


lowed so far as possible, except that all complaints against special 
assessments will be treated together. Two cases applied the well- 
established rule that intangibles may be taxed to their owner at his 
domicile. Maguire v. 1 'refry 0 approved of a tax at the domicile on 
income from a trust estate created and administered in another 
state in which the securities were kept by the trustee. The income 
tax in question was not a general one, but a substitute for the ordi¬ 
nary tax on intangibles. The subject matter of the tax was said to 
be “the property right belonging to the beneficiary, realized in the 
shape of income.” Though the legal title to the property was held 
in another state, the beneficiary was said to have “an equitable right, 
title and interest distinct from its legal ownership.” The case was 
said to present no difference in principle from the taxation of 
credits to the creditor at his domicile. Mr. Justice Day wrote the 
opinion of the court. Mr. Justice McReynolds dissented, without 
opinion. 

Cream of Wheat Co. v. Grand Forks County 6 7 sustained a tax 
on the value of the outstanding stock of a domestic corporation, 
in excess of the value of the real and personal property and 
certain indebtedness. Mr. Justice Brandeis said that it is not ne¬ 
cessary to consider whether the demand is an excise tax or a prop¬ 
erty tax. It is either on intangibles or measured by them and is 
therefore good. The absence of tangible property in the state 
makes no difference. Though the intangible may be taxed at the 
situs of the tangible with which it is associated, it may also have a 
situs of its own at the domicile of the corporation. The Four¬ 
teenth Amendment does not prohibit bi-state double taxation. 8 9 

The vice of extraterritoriality can be committed not only by 
directly taxing property beyond the jurisdiction but also by taking 
account of such property to increase the assessment of what is con- 
cededly taxable. An instance of this appears in Wallace v. Hines? 
already considered in the sub-section on state taxation of interstate 

6 253 U. S. 12, 40 Sup. Ct. 417 (1920). See 90 Cent. L. J. 439. 

7 253 U. S.-, 40 Sup. Ct. 558 (1920). 

8 For a note on taxing a stock-exchange seat as intangible property at 
the domicile of the owner, see 29 Yale L. J. 9 t 6. On the mode of assessing 
good will see 33 Harv. L. Rev. 323. On the situs of property transferred by 
executors to themselves as trustees under the will see 29 YaeE L. J. 467. 

9 253 U. S. 66, 40 Sup. Ct. 435 (1920), 19 Mich. L. REv. 30. 



- 40 - 


commerce. This corrected North Dakota’s assumption that it con¬ 
tains as much of the total value of an interstate railroad as the 
length of the main track in North Dakota bears to the length of 
the whole line. The opinion declares specifically that this defect is 
as bad in an excise on foreign corporations as in a tax formally on 
their property. The exaction is called “an unwarranted interfer¬ 
ence with interstate commerce and a taking of property without due 
process of law.” Whether it would be a violation of the due pro¬ 
cess clause if the corporation were not engaged in interstate com¬ 
merce is not specifically declared, but all the discussion in the opin¬ 
ion is on the evil of assessing extraterritorial values. An old case 10 
not explicitly overruled sanctions an excise on a foreign corporation 
not engaged in interstate commerce though the assessment takes ac¬ 
count of total capital stock representing property largely in other 
states. As elaborated elsewhere, * 11 this case can be distinguished 
logically from decisions like Wallace v. Hines which adduce the due 
process as well as the commerce clause to annul similar taxes on 
foreign corporations engaged partly in interstate commerce. But 
the tenor of recent opinions makes it pretty evident that the court 
is prepared to accord to foreign corporations engaged exclusively 
in local commerce the same relief that it gives to those doing a 
combined local and interstate business. 12 

Complaints of non-residents against state inheritance and state 
income taxes include extraterritoriality and discrimination against 
citizens of other states. The inheritance tax case is Maxwell v. 
Bugbee. 13 In assessing its inheritance tax on the tangible property 
and the stock in New Jersey corporations left by non-resident de- 


10 Horn Silver Mining Co. v. New York, 143 U. S. 305, 12 Sup. Ct. 
403 (1892). 

11 “The Changing Law of Foreign Corporations”, 33 Poe. Sci. Quart. 
549, and “State Excises on Foreign Corporations”, Proceedings oe the Na¬ 
tional Tax Association eor 1919, page 230. 

u For notes on the Connecticut corporate excise measured by income, see 
20 Colum. L. Rev. 324, and 33 Harv. L. Rev. 736. The Connecticut decision 
has since been affirmed by the Supreme Court. For a discussion of an excise 
on vehicles measured by their capacity see 33 Harv. L. Rev. 737. 

“250 U. S. 525, 40 Sup. Ct. 2 (1919). See Joseph F. McCloy, “Tricks 
of Taxation Under the New Jersey Inheritance Tax Law”, 3 Bull. Nat. 
Tax Ass'n. 145, and notes in 33 Harv. L. Rev. 582, 616, 14 III. L. Rev. 661, 
68 U. Pa. L. Rev. 184, and 29 Yale L. J. 464. 



cedents, New Jersey takes that part of the tax that would have 
been due on the whole estate, had the decedent been a resident, 
as the taxable property in New Jersey bears to the whole estate. 
The effect of this is to use extra-state property to determine the ap¬ 
plication of the progressive rates of assessment to the New Jersey 
property. The rate depends not on the amount of New Jersey as¬ 
sets but on the total assets of the estate. The New Jersey assets 
thus get placed somewhere around the middle of the estate instead 
of at the bottom. In dissenting from the judgment sustaining the 
tax, Mr. Justice Holmes for himself, the Chief Justice and Justices 
Van Devanter and McReynolds observed: 

“Many things that a legislature may do if it does them 
with no ulterior purpose, it cannot do as a means to reach 
what is beyond its constitutional power. ... New Jersey can¬ 
not tax the property of Hill or McDonald outside the State 
and cannot use her power over property within it to accom¬ 
plish by indirection what she cannot do directly.... 

It seems to me that when property outside the State is 
taken into account for the purpose of increasing the tax 
upon property within it, the property outside is taxed in 
effect, no matter what form of words may be used. It ap¬ 
pears to me that this cannot be done, even if it should be done 
in such a way as to secure equality between residents in New 
Jersey and those in other states. 

New Jersey could not deny to residents in other States 
the right to take legacies which it granted to its own citi¬ 
zens, and therefore its power to prohibit all legacies cannot 
be invoked in aid of a principle that affects the foreign resi¬ 
dents alone.” 

The majority, however, speaking through Mr. Justice Day, in¬ 
voked the principle sometimes applied that taxes on a privilege 
may be measured by property not itself subject to levy. The tax 
is not on property and therefore not on extra-state property. The 
apparent discrimination against non-residents is not a denial of 
equal protection of the laws or a violation of the provision that “the 
citizens of each state shall be entitled to all privileges and immuni¬ 
ties of citizens in the several states.” The reason is that the dis¬ 
crimination is based on a reasonable classification and not an arbi- 


42 — 


trary one. The resident decedent stands in a different relation to 
the state than does the non-resident. His whole estate is taxed on 
its devolution, while not all even of the New Jersey assets of non¬ 
residents enter into the assessment of their estates. “The question 
of equal protection must be decided as between resident and non¬ 
resident decedents as classes, rather than by the incidence of the tax 
upon the particular estates” before the court. Inequalities “that re¬ 
sult not from hostile discrimination, but occasionally and incident¬ 
ally in the application of a system that is not arbitrary in its classi¬ 
fication, are not sufficient to defeat the law.” 14 

The two state income tax cases are Shaffer v. Carter 35 and 
Travis v. Yale & Towne Mfg. Co . 16 Mr. Shaffer, who lived in 
Chicago, did not want to be taxed by Oklahoma on income arising 
from Oklahoma oil wells. He argued that an income tax is a per¬ 
sonal tax and can therefore not be levied on persons not domiciled 
in the taxing jurisdiction. Mr. Justice Pitney answered that “this 
argument, on analysis, resolves itself into a mere question of defini¬ 
tions, and has no legitimate bearing upon any question raised under 

14 For articles on inheritance taxation see R. W. Carrington, “Death 
Duties”, 6 Va. L. Rev. 568, Charles W. Gerstenberg, “The Importance of 
Unification of inheritance Tax Laws”, 5 Buee. Nat. Tax Ass'n. 281, Thomas 
Reed Powell, “Extra-territorial Inheritance Taxation”, 20 Coeum. L. Rev. 
1, 283, Allen Sherman, “Studies in Inheritance Taxation”, 13 Maine L. Rev. 
78, 127, and Delger Trowbridge, “Inheritance Tax Laws as Affecting Powers 
of Appointment”, 8 Caeif. L. Rev. 216. 

The following editorial notes deal with inheritance taxation: transfers 
inter vivos, 33 Harv. L. Rev. 481, 15 Iee. L. Rev. 106; foreign realty under 
doctrine of equitable conversion, 5 Iowa L. Buee. 278, 29 YaeE L. J. 808; 
suit in foreign state to collect inheritance tax, 5 Cornell L. Q. 309, 33 Harv. 
L. REV. 840, 870; whether Hetty Green was doing business in New York 
within the meaning of the inheritance tax law, 33 Harv. L. Rev. 616, 18 
Mich. L. Rev. 346; transfer of joint account at death of one joint owner, 29 
Yale L. J. 465; land devised in fulfillment of contract ordered sold to pay 
inheritance tax, 29 Yale L. J. 808; extra inheritance tax on property not 
taxed during lifetime of deceased, 20 Coeum. L. Rev. 625. 

”252 U. S. 37, 40 Sup. Ct. 221 (1920). See 90 Cent. L. J. 277, 20 
Coeum. L. Rev. 457, 18 Mich. L. Rev. 547, and 29 Yale L. J. 799. 

“252 U. S. 60, 40 Sup. Ct. 228 (1920). See references in note 15 supra. 
For articles on the New York income tax written prior to the decision in the 
principal case see Edwin R. A. Seligman, “The New York Income Tax”, 34 
Pol. Sci. Quart. 521, and “The Taxation of Non-residents in the New York 
Income Tax”, 5 Bull. Nat. Tax Ass'n. 40. 



43 — 


the federal Constitution.” He reviewed what Oklahoma did for 
Mr. Shaffer’s oil wells and concluded: “That it may tax the land 
but not the crop, the tree but not the fruit, the mine or well but net 
the product, the business but not the profit derived from it, is wholly 
inadmissible.” Another ingenious contention levelled against the 
tax was that the income assessed is the joint product of Oklahoma 
wells and Chicago intelligence and that since Oklahoma cannot tell 
how much comes from the earth and how much from extra-state 
management, it cannot tax any. This was answered by saying that 
“at most, there might be a question whether the value of the service 
of management rendered from without the state ought not to be al¬ 
lowed as an expense incurred in producing the income; but no such 
question is raised in the present case and we express no opinion 
upon it.” The complaint that non-residents are discriminated 
against because they are not allowed to deduct losses incurred in 
other states, as residents are allowed to do, was dismissed by point¬ 
ing out that residents are taxed on income from other states while 
non-residents are not. The difference of treatment “is only such 
as arises naturally from the extent of the jurisdiction of the state 
in the two classes of cases, and cannot be regarded as an unfriendly 
or unreasonable discrimination.” An interesting question respect¬ 
ing the procedure for collecting the tax will be dealt with in a 
moment. 

Travis v. Yale & Towne Mfg. Co . 17 reaffirmed the power of a 
state to tax the income of non-residents earned within its borders. 
The principle was declared to cover incomes “arising from any 
business, trade, profession, or occupation” carried on within the 
borders of the state. The discussion of the procedure for collect¬ 
ing the tax, which will be considered later, makes it clear that in¬ 
come earned within the state is taxable though the income is paid 
and received elsewhere. But this New York tax on the income of 
non-residents was held unconstitutional because residents were al¬ 
lowed personal and family exemptions while non-residents were 
not. Whether the non-resident must be granted the same exemp¬ 
tion as the resident or only such part thereof as his New York 
income bears to his total income was not considered. The dis¬ 
crimination before the court was held to be forbidden by the 


1T Note 15, supra. 




- 44 - 


clause declaring that “the citizens of each state shall be entitled to 
all privileges and immunities of citizens in the several states.” The 
statute was said to produce, not merely “a case of occasional or ac¬ 
cidental inequality due to circumstances personal to the taxpayer,” 
like that in the New Jersey inheritance tax law, but “a general rule, 
operating to the disadvantage of all non-residents including those 
who are citizens of the neighboring states, and favoring all resi¬ 
dents including those who are citizens of the taxing state.” New 
Jersey and Connecticut citizens compete with New York citizens 
for New York jobs, as the Constitution gives them the right to do. 
“Whether they must pay a tax upon the first $1,000 or $2,000 of in¬ 
come, while their associates and competitors who reside in New 
York do not, makes a substantial difference.” 

In two other cases corporations insisted that discriminations 
against them worked a denial of equal protection of the laws. The 
complainant in F. S. Royster Guano Co. v. Virginia 18 was success¬ 
ful. All the court but Justices Brandeis and Holmes thought it 
arbitrary and unreasonable to make domestic corporations doing 
some business in the state pay a tax on all their income wherever 
earned, while domestic corporations doing no business in the state 
paid on none of their income. Hence they relieved the sufferer 
from the exaction on its extra-state income. Mr. Justice Brandeis, 
in dissenting, thought of a reason for the difference of treatment. 
There were other taxes to which all domestic corporations are 
alike subjected. Thus the state gets revenue from corporations 
chartered there but doing all their business elsewhere. This rev¬ 
enue might be lost if such corporations found Virginia's demands 
so exacting that they changed their domicile to some sister state 
Corporations doing business in Virginia would be less apt to try to 
move. This is to say that it is reasonable to squeeze some and not 
others when the others have a source of self-help which the some 
have not. 

Though the complainant in Ft. Smith Lumber Co. v. Arkansas 19 
was sent away comfortless, it had the satisfaction of knowing that 
Justices McKenna, Day, Van Devanter and McReynolds sympa¬ 
thized with it. They dissented, but without .saying why. Under the 

“253 U. S.-, 40 Sup. Ct. 560 (1920). See 20 Coeum. L. Rev. 793. 

”251 U. S. 532, 40 Sup. Ct. 304 (1920). 



— 45 — 


Arkansas law individual stockholders of domestic corporations 
were not taxed on their stock, nor were they subject to reassess¬ 
ment of back taxes. To a domestic corporation which desired simi¬ 
lar treatment, Mr. Justice Holmes replied for a majority of the 
court: 

“The objection to the taxation as double may be laid on one 
side. That is a matter of State law alone. The Fourteenth 
Amendment no more forbids double taxation than it does 
doubling the amount of the tax; short of confiscation or pro¬ 
ceedings unconstitutional on other grounds.... We are of 
opinion that it also is within the power of a State, so far as 
the Constitution of the United States is concerned, to tax its 
own corporations in respect of the stock held by them in other 
domestic corporations, although unincorporated stockholders 
are exempt. A State may have a policy in taxation... .If the 
State of Arkansas wished to discourage but not to forbid the 
holding of stock in one corporation by another and sought to 
attain the result by this tax, or if it simply saw fit to make 
corporations pay for the privilege, there would be nothing in 
the Constitution to hinder. A discrimination between corpor¬ 
ations and individuals with regard to a tax like this cannot be 
pronounced arbitrary, although we may not know the precise 
ground of policy that led the State to insert the distinction in 
the law. 

The same is true with regard to confining the recovery of 
back taxes to those due from corporations. It is to be pre¬ 
sumed, until the contrary appears, that there were reasons for 
more strenuous efforts to collect admitted dues from corpora¬ 
tions than in other cases, and we cannot pronounce it an un¬ 
lawful policy on the part of the State.” 

The double taxation referred to was predicated on the fact that 
the corporation whose stock was taxed to corporate stockholders was 
itself taxed on all that gave the stock value. 

Of four complaints against special assessments, only one got any 
balm. Branson v. Bush 20 raised two issues. A railroad insisted that 
it was denied the equal protection of the laws because the valuation 


24 251 U. S. 182, 40 Sup. Ct. 113 (1919)- 



- 46 - 


of its property for the assessment of a special tax included franchise 
value. Inasmuch as the statute excluded the value of the franchise 
to be a corporation, the court, with the exception of Mr. Justice Mc- 
Reynolds, were satisfied that the valuation was confined to that of 
the real estate estimated by considering the use to which it was put 
as an integral link in a larger unit, thus applying to special assess¬ 
ments the rule long prevailing as to general property taxation . 21 
The road also insisted that it was not benefited by the improved high¬ 
way for which it was taxed, and the Circuit Court of Appeals had 
agreed that the evidence failed to show any such benefit. Mr. 
Justice Clarke recognized that the former announcement of the Su¬ 
preme Court that the determination of the legislature as to the area 
benefited is conclusive had since been subjected to “the qualification, 
which was before implied, that the legislative determination can be 
assailed under the Fourteenth Amendment only where the legislative 
action is 'arbitrary, wholly unwarranted’, ‘d flagrant abuse and by 
reason of its arbitrary character a confiscation of particular prop¬ 
erty’.'"’ The absence of any such flagrant abuse in the present case 
was predicated not only on the specific testimony but on “the obvious 
fact that anything that develops the territory which a railroad serves 

21 The District Court had “permanently enjoined the tax to the extent 
that it was imposed on personal property—the rolling stock and the materials 
of the company.” As to the franchise value which had been included, the 
court pointed out that the only basis on which to assume that this had been 
assessed was the presumption that the tax commission had followed the 
statute and “considered” the franchises. After remarking that this would be 
“an unusually meagre basis surely for invalidating a tax of the familiar char¬ 
acter of this before us”, Mr. Justice Clarke continues: 

“If, however, the distinction sometimes taken between the ‘essential prop¬ 
erties of corporate existence’ and the franchises of a corporation * * * be 
considered substantial enough to be of practical value, and if it be assumed 
that the distinction was applied by the state commission in making the assess¬ 
ment here involved, this would result, not in adding personal property value 
to the value of the real estate of the company, but simply in determining what 
the value of the real property was—its right of way, tracks and buildings— 
having regard to the use which it made of it as an instrumentality for earning 
money in the conduct of railroad operations. This at most is no more than 
giving to the real property a value greater as part of a railroad unit and a 
going concern than it would have if considered only as a quantity of land, 
buildings and tracks.” 

For a note on a case holding that pipe lines are personal property and not 
subject to a special assessment, see 20 Coeum. L. Rev. 703. 



47 — 


must necessarily be of benefit to it, and that no agency for such de¬ 
velopment equals that of good roads .” 22 

A like rebuff met the similar contention in Goldsmith v. Prender- 
gast Construction Co. 23 that a sewer assessment was invalid because 
some of the property benefited was excluded from the area charged. 
The state court had conceded that some of the land in the unburden¬ 
ed region might be drained into the sewer, but it had not thought this 
sufficient to justify judicial interference with the exercise of the dis¬ 
cretion vested in the municipal authorities. “Much less,” says Mr. 
Justice Day, “do .such findings afford reason for this court in the 
exercise of its revisory power under the federal Constitution to re¬ 
verse the action of the state courts, which fully considered the facts, 
and refused to invalidate the assessment.” 

Two complaints were directed against the procedure for appor¬ 
tioning benefits as the basis of special assessments. The plaintiff in 
Farncomb v. Denver 24 alleged that the hearing proffered by the 
statute was before a board which had power only to recommend 
changes in the assessment and that therefore he was denied due pro¬ 
cess of law. The state court, however, had construed the statute dif¬ 
ferently and held that the city council could not only hear and recom¬ 
mend but could also determine. This construction was of course bind¬ 
ing on the Supreme Court. As the plaintiff had not availed himself of 
the administrative opportunity open to him, he was denied judicial 
relief. In Oklahoma Ry. Co. v. Severns Paving Co . 25 there was 
some doubt whether the decree of the court below definitely assured 
a hearing on a re-assessment after the first assessment had been in- 
validly laid against the owner rather than against the property, and 
the decree was therefore modified to make certain the right to a hear¬ 
ing . 26 __,__ 

22 For a note on an Illinois decision holding - that a special assessment for 
paving could not be levied on lots which were part of a railroad right of way, 
see 29 Yale L. J. 68o. 

23 252 U. S. 12, 40 Sup. Ct. 273 (1920). 

24 252 U. S. 7, 40 Sup. Ct. 271 (1920). 

25 251 U. S. 104, 40 Sup. Ct. 73 (1919)- 

26 For a note on taxing stockholders of a national bank without notice 
to them, see 4 Minn. L. Rev. 305. 

For a discussion of the question whether the proceeds from the sale of 
property originally paid for by special assessments must be returned to those 
previously assessed, see 33 Harv. L. Rev. 481. 




- 48 - 


Objections to the procedure for collecting the Oklahoma and 
New York income taxes on non-residents were held to be without 
sufficient foundation. In Travis v. Yale & Towne Mfg. Co . 27 a Con¬ 
necticut corporation, having its main place of business in Connecti¬ 
cut, but also carrying on business in New York, thought that New 
York ought not to be allowed to require it to adjust its system of 
accounting and paying salaries and wages to the extent required to 
deduct and withhold the New York tax. Mr. Justice Pitney answer¬ 
ed that the withholding provisions applied only to salaries earned in 
New York, that the company might pay such salaries in New York, 
and that "the fact that it may be more convenient to pay them in 
Connecticut is not sufficient to deprive the state of New York of the 
right to impose such a regulation.” The allegation of an unconstitu¬ 
tional discrimination against citizens of other states because the 
withholding provisions applied only to non-residents was met by 
saying that this "does not in any wise increase the burden of the tax 
on non-residents, but merely recognizes the fact that as to them the 
state imposes no personal liability, and hence adopts a convenient sub¬ 
stitute for it.” 

The objection levelled against the procedure for collecting the 
Oklahoma tax sustained in Shaffer v. Carter 28 related to the provi¬ 
sion imposing a lien upon all the delinquent’s property within the 
state, real and personal. Mr. Justice Pitney said that the objection 
reduces itself to this: 

"that the state is without power to create a lien upon any 
property of a non-resident for income taxes except the very 
property from which the income proceeded; or, putting it in 
another way, that a lien for an income tax may not be imposed 
upon a non-resident’s unproductive property, nor upon any 
particular productive property beyond the amount of the tax 
upon the income that has proceeded from it.” 

He then stated that the facts of the case do not raise the question, 
as it appears that the whole of the complainant’s property in Okla¬ 
homa was used to produce oil and that "his entire business in that 

21 Note 16, supra. 

n Note 15, supra. 



— 49 — 


and other states was managed as one business, and his entire net in¬ 
come in the state for the year 1916 was derived from that business.” 
The opinion then proceeds: 

“Laying aside the probability that from time to time there 
may have been changes arising from purchases, new leases, 
sales, and expirations (none of which, however, is set forth in 
the bill), it is evident that the lien will rest upon the same 
property interests which were the source of the income and on 
which the tax is imposed. The entire jurisdiction of the state 
over appellant’s property and business and the income that 
he derived from them—the only jurisdiction that it has sought 
to assert—is a jurisdiction in rem: and we are clear that the 
state acted within its lawful power in treating his property in¬ 
terests and business as having both unity and continuity. Its 
purpose to impose income taxes was declared in its own con¬ 
stitution, and the precise nature of the tax and the measures 
to be taken for enforcing it were plainly set forth in the act of 
1915; and plaintiff having thereafter proceeded, with notice 
of this law, to manage the property and conduct the business 
out of which proceeded the income now taxed, the state did 
not exceed its power or authority in treating his property in¬ 
terests and his business as a single entity, and enforcing pay¬ 
ment of the tax by the imposition of a lien, to be followed by 
execution or other appropriate process, upon all property em¬ 
ployed in the business.” 

This leaves unsettled a number of interesting questions certain 
to arise in the near future. Suppose the sources of income within 
the state are varied and unrelated to each other, may the whole tax 
be collected from any one piece of property? Suppose there is no 
property within the state, may any single payer of income to a non¬ 
resident be required to withhold enough to ensure the tax on income 
paid by others as well ? May a tax on income earned within the state 
be collected by garnisheeing debtors who owe the non-resident capital 
rather than income ? Obviously it will be grievously vexatious to re¬ 
quire withholding at the source of the tax on every single dollar of 
income going to a non-resident, as the state under the Yale & Town 
case may lawfully do. Yet if this is not done, non-residents are apt 


— 50 — 


to escape paying admitted dues unless some or all of the questions 
just raised are answered in the affirmative. 29 

In two of the cases already considered there was dispute as to 
the propriety of the proceedings chosen by the taxpayer to contest 
the validity of the tax. Both involved injunctions against state taxes 
sought from a federal district court, and in both the issue was wheth¬ 
er the complainant had an adequate remedy at law. The contention 
that the suit was in effect one against the state was not made. In 
Wallace v. Hines 30 the tax was made a lien on all the property of the 
railroad, thus putting a cloud upon the title, and delay in paying the 
tax was visited with considerable penalties. The only remedy at law 
suggested to deprive equity of the jurisdiction it would otherwise 
have was that alleged by the .state to be offered by a statute saying 
that “an action respecting the title to property, or arising upon con¬ 
tract may be brought in the district court against the State the same 
as against a private person.” In sustaining the injunction, Mr. 
Justice Holmes said: 

“This case does not arise upon contract except in the purely 
artificial sense that some claims for money alleged to have 
been obtained wrongfully might have been enforced at com¬ 
mon law by an action of assumpsit. Nothing could be more 
remote from an actual contract than the wrongful extortion 
of money by threats, and we ought not to leave the plaintiffs 
to a speculation upon what the State Court might say if an 
action at law were brought.” 

In Shaffer v. Carter ? 1 the state procedure for correcting and ad¬ 
justing tax returns, as interpreted by the state court, was said to fall 
“short of indicating—to say nothing of plainly showing—” that it 
“would afford an adequate remedy to a party contending that the 
income tax law itself was repugnant to the Constitution of the United 
States.” But the decision that it was proper to resort to equity for 
relief was placed more definitely on this narrower ground: 

“For removal of a cloud upon title caused by an invalid lien 
imposed by a tax valid in itself, there appears to be no legal 

29 See Walter N. Seligsberg, “Collection of State Income Taxes from Non¬ 
residents”, 5 Burr. Nat. Tax Ass'n. 244. 

30 Note 9, supra. 

31 Note 15, supra. 



- 51 - 


remedy. Hence, on this ground at least, resort was properly 
had to equity for relief; and since a court of equity does not 
'do justice by halves,’ and will prevent, if possible, a multi¬ 
plicity of suits, the jurisdiction extends to the disposition of 
all questions raised by the bill.” 

In this case the injunction ultimately failed because both the tax 
and the procedure for its collection were bound to be valid. 

In United States v. Osage County, 32 which allowed the federal 
government to sue in the federal court to protect certain Indians 
from wrongful state taxation, "the existence of power in the 
United States to sue” was said to dispose "of the proposition that be¬ 
cause of remedies afforded to individuals under the state law the 
authority of a court of equity could not be invoked by the United 
States.” Reference was made to the great number of Indians in¬ 
volved and the prevention of multiplicity of suits. Ward v. Love 
County 33 reversed the decision of the Oklahoma court that taxes 
collected from Indians had been paid by them voluntarily and 
so could not be recovered back by suit. It was recognized that in 
general the question whether the taxes had been collected under 
compulsion after adequate protest is a non-federal one on which the 
determination of the state court is conclusive. But Mr. Justice 
Van Devanter pointed out that, if non-federal grounds plainly unten¬ 
able may be thus successfully put forward in state courts, the power 
of the United States courts to review the federal question may be 
defeated. He found that the decision of the state court "that the 
taxes were paid voluntarily was without any fair or substantial sup¬ 
port.” The fact that the county might have paid over to the state or 
municipal bodies some of the taxes thus wrongfully extorted was 
held not to save it from making a refund to the Indians. On this 
point the opinion declared: 

"As the payment was not voluntary, but made under com¬ 
pulsion, no statutory authority was essential to enable or re¬ 
quire the county to refund the money. It is a well-settled rule 
that 'money got through imposition’ may be recovered back; 

32 251 U. S. 12S, 40 Snp. Ct. 100 (1919), 19 Mich. L. Rev. 17, note 24. 

33 2^3 U. S. 17, 40 Snp. Ct 419 (1920). To same effect, Broadwell v 
Carter County, 253 U. S. 25, 40 Sup. Ct. 422 (1920). 




— 52 — 


and, as this court has said on several occasions, ‘the obliga¬ 
tion to do justice rests upon all persons, natural and artifi¬ 
cial, and if a county obtains the money or property of others 
without authority, the law, independent of any statute, will 
compel restitution or compensation’ .. .To say that the 
county could collect these unlawful taxes by coercive means, 
and not incur any obligation to pay them back is nothing short 
of saying that it could take or appropriate the property of 
these Indian allottees arbitrarily and without due process of 
law. Of course this would be in contravention of the Four¬ 
teenth Amendment, which binds the county as an agency of 
the state .” 34 

In the other tax cases that have been considered, the taxing auth¬ 
ority did not contest the propriety of the procedure by which the 
validity of the tax was questioned. Four involved injunctions against 
state taxes; two in federal courts 35 and two in state courts . 36 Four 
were actions brought against the taxpayer , 37 and five were suits 
brought by the taxpayer to recover back taxes paid under protest , 38 
One was a certiorari proceeding to review an assessment, begun in 
a state court and taken to the United States Supreme Court on writ 
of error . 39 

A far-reaching issue of what is a requisite public purpose in ex¬ 
ercising the taxing power came before the court in Green v. Frasier 40 

“On the question of what constitutes payment under duress, see 29 
Yale L. J. 574- 

“Branson v. Bush, note 20, supra; Askren v. Continental Oil Co., 252 
U. S. 355, 4° Sup. Ct. 355 (1920), 19 Mich. L. Rev. 32, note 57. 

“Farncomb v. Denver, note 24, supra; Wagner v. Covington, 251 U. S. 
95, 40 Sup. Ct 93 (1919), 19 Mich. L. Rev. 31, note 56. 

87 Cream of Wheat Co. v. Grand Forks County, note 7, supra; Ft. Smith 
Lumber Co. v. Arkansas, note 19, supra; Goldsmith v. Prendergast Construc¬ 
tion Co., note 23, supra; Oklahoma Ry. Co. v. Severns, note 25, supra. 

“Evans v. Gore, note 2, supra; Eisner v. Macomber, note 4, supra; 
Maguire v. Trefry, note 6, supra; F. S. Royster Guano Co. v. Virginia, note 
18, supra; Wagner v. Covington, 251 U. S. 95, 40 Sup. Ct. 93 (1919), 19 Mich. 
L. Rev. 31, note 56. This last case included also a suit to enjoin the pay¬ 
ment of the tax. 

80 Maxwell v. Bugbee, note 13, supra. It should be noted that New 
Jersey permits a broader use of certiorari than do most jurisdictions. 

40 253 U. S.-, 40 Sup. Ct. 499 (1920). For notes on cases prior to the 

Supreme Court decision, see 4 Minn. L. Rev. 65, and 29 Yale L. J. 933. For 



— 53 


in which the program of the Non-Partisan League in North Dakota 
was questioned. The state proposed to raise by taxation and bonds 
money to inaugurate a state bank, state warehouses, elevators and 
flour mills, and a state home building association which was to build, 
buy, sell and lease homes for the citizens of the state. Taxpayers 
sought an injunction in the state court and lost. The denial of the 
injunction was affirmed by the Supreme Court, Mr. Justice Day 
declaring: 

“Under the peculiar conditions existing in North Dakota, 
which are emphasized in the opinion of its highest court, if 
the state sees fit to enter upon such enterprises as are here 
involved, with the sanction of its Constitution, its Legisla¬ 
ture and its people, we are not prepared to say that it is with¬ 
in the authority of this court, in enforcing the observance of 
the Fourteenth Amendment, to set aside such actions by judi¬ 
cial decision.” 

The “peculiar conditions” referred to included the facts that 
North Dakota is predominantly agricultural, that the existing system 
of transporting and marketing grain “prevents the realization of what 
are deemed just prices,” and that a large proportion of the popula¬ 
tion are tenants moving about from place to place and that an im¬ 
proved opportunity to secure and maintain homes would promote the 
general welfare. In the course of the opinion Mr. Justice Day said 
that the court had always declined to give a precise meaning to “due 
process of law,” preferring “to leave its scope to judicial decision 
when cases from time to time arise.” Though it has come to be rec¬ 
ognized that due process prevents the states from imposing taxes for 
a merely private purpose, “courts, as a rule, have attempted no judi¬ 
cial definition of a ‘public’ and distinguished from a‘private’ purpose, 
but have left each case to be determined by its own peculiar circum¬ 
stances.” Questions of policy are not for the court, nor is it con¬ 
cerned with the wisdom of the legislation. It is pointed out that the 
public conduct of these business enterprises stands on a different 
footing from public gifts to privately conducted businesses. The 

articles inspired by the North Dakota program and touching the question of 
taxation, see Andrew A. Bruce, “The Tyranny of the Taxing Power”, 18 
Mich. L. Rev. 508, and “State Socialism and the School Land Grants”, 33 
Harv. L. Rev. 401. 



— 54 — 


precise question before the court was found to be a novel one, but 
the case was thought to come within the principle of an earlier deci¬ 
sion 41 which found a sufficient public purpose in a municipal coal 
and wood yard. The decision was unanimous. The North Dakota 
experiment is thought by some to have a strong flavor of state so¬ 
cialism. If they are right, the federal Constitution appears to allow 
more room for socialistic experiments than a number of its most 
fervent eulogists would lead us to infer . 42 

IV. Police Power 

The classification of cases on police power becomes increasingly 
difficult as we get farther and farther away from the conception of 
the police power as confined to the rudimentary requirements of 
health, morals and safety. Classification on the basis of the objects 
for which the power is exercised is hardly feasible when the same 
statute manifestly has several objects. Any grouping of cases un¬ 
der the head of “general welfare” would carry a confession of in¬ 
ability to classify. If, however, we regard the relationships, inter¬ 
ests and subject matters dealt with, some fairly clear lines of division 
emerge. True, these lines cross each other so that the same statute 
may be put into more than one section if any one insists on being 
nice about it. Yet “food and drink”, “occupations and professions,” 
and “physical conditions” make convenient separate heads, even 
though they embrace statutes which also fall readily under the more 
general heads of “commercial intercourse,” “industrial relations” or 
“public utilities.” It seems best to group under the latter head all 
cases dealing with business which partakes of the nature of a public- 
service enterprise, since the police power over such business is of a 
special kind. This grouping, however, must not be taken as imply¬ 
ing that a business can not have one aspect of a public utility with¬ 
out having all. Subjection to price fixing does not necessarily carry 
with it a duty to serve all. The regulatory power develops in a 
creep-mouse, crawl-mouse way, and each case is confined to its spe¬ 
cial facts like all cases on police power. 

41 Jones v. Portland, 245 U. S. 217, 38 Sup. Ct. 112 (1917). 

42 For notes on the constitutionality of state taxation to provide funds 
for bonuses or bounties to soldiers in the United States forces, see 33 Harv. 
L. Rev. 846, 871, 18 Mich. L. Rev. 535, 699, 4 Minn. L. Rev. 233, and 29 
Yai,E k. J. 690. 



— 55 — 


Of the eighteen police power cases decided during the last term, 
twelve have to do with requirements on those whose business has 
some or all of the elements of a public utility. In Producers’ Trans¬ 
portation Co. v. Railroad Commission ** the complainant unsuccess¬ 
fully resisted inclusion in this class. A pipe-line company sought to 
justify its resistance of the orders of the railroad commission on the 
ground that “it was constructed solely to carry crude oil for particu¬ 
lar producers from their wells to the seacoast under strictly private 
contracts, and that there had been no carrying for others, nor any 
devotion of the pipe line to a public use. ,, Mr. Justice Van Devanter 
conceded that, if the facts were as alleged, the enterprise could not 
be converted by legislative fiat or administrative order into a public 
utility. But he sustained the state court and held the company al¬ 
ready a common carrier, in view of the facts that it readily admitted 
new producers and excluded none from the agency agreements it de¬ 
vised, that its charter authorized it to carry on a general transporting 
business, and that it had exercised the power of eminent domain 
which it secured only by asserting that it was engaged in transporting 
oil by pipe line “as a common carrier for hire” and that the right of 
way sought was “for a public use.” 44 

It is familiar that the initiation of a public-utility enterprise does 
not necessarily carry with it an obligation to continue indefinitely. 
This finds illustration in Brooks-S'canton Co. v. Railroad Commis¬ 
sion 45 in which a company was allowed to abandon the operation of 
a narrow-gauge railway which could not be run remuneratively. 
The state court had sustained the order of the commission forbid¬ 
ding the abandonment, on the ground that the railroad corporation 
was identical with a lumber corporation and that the entire business 
of the concern was remunerative. But Mr. Justice Holmes declared 
that “a carrier cannot be compelled to carry on even a branch of 
business at a loss, much less the whole business of carriage.” After 
noting qualifications on the principle where obligations are im¬ 
posed by charter, he continued: 

“But that special rule is far from throwing any doubt upon 

43 251 U. S. 228, 40 Sup. Ct. 131 (1920). See 18 Mich. L. Rev. 804. 

44 For a note on “what constitutes a public service”, see 26 W. Va. L. Q. 
140. See also John B. Cheadle, “Governmental Control of Business”, 20 
Coeum. L. Rev. 438, 550. 

4t 251 U. S. 396, 40 Sup. Ct. 183 (1920). 



- 56 - 


a general principle too well established to need further argu¬ 
ment here. The plaintiff may be making money from its saw¬ 
mill and lumber business, but it no more can be compelled to 
spend that than it can be compelled to spend any other money 
to maintain a railroad for the benefit of others who do not 
care to pay for it. If the plaintiff be taken to have granted 
to the public an interest in the use of the railroad, it may 
withdraw its grant by discontinuing the use when that use can 
be kept up only at a loss. Munn v. Illinois, 94 U. S. 113, 126. 
The principle is illustrated by the many cases in which the 
constitutionality of a rate is shown to depend upon whether 
it yields to the parties concerned a fair return.” 

The state court had mentioned also that the commission had order¬ 
ed the company to submit a new schedule of transportation which 
might be operated at a profit, but this was dismissed by the Su¬ 
preme Court as a mere makeshift and the language of hope un¬ 
supported by any facts. 

Of six cases dealing with the imposition of duties on common 
carriers, two related to the kind and quality of service. Great North - 
ern Ry. Co. v. Cahill 46 followed an earlier decision in holding that it 
is no part of the duty of a railroad to furnish cattle scales along its 
right of way, even though the public might be greatly benefited 
thereby. There is a faint hint in the opinion that there might be cir¬ 
cumstances which would raise a question as to some qualification of 
the doctrine, but the hint seems too faint to cause any fright to car¬ 
riers. Sullivan v. Shreveport 47 related to the mode of performing a 
conceded duty. It sanctions an ordinance requiring every street car 
to be operated by a conductor and motorman, notwithstanding con¬ 
siderable evidence in support of the safety of a new type of one-man 
car. There was other evidence of the possibility of danger and the 
certainty of inconvenience from this type of car. Mr. Justice Clarke 
observes that the operation of cars presents special problems in each 
community and that the determination of the local authorities should 
be accepted except in clear cases of arbitrariness. 

Two cases required street railroads to help take care of the streets 
which they use. Milwaukee Electric Ry. & Light Co. v. Wisconsin 48 

48 253 U. S.-, 40 Sup. Ct. 457 (1920). 

41 251 U. S. 169, 40 Sup. Ct. 102 (1919). 

48 252 U. S. 100, 40 Sup. Ct. 306 (1920). 



— 57 — 


found nothing “inherently arbitrary or unreasonable” in enforcing 
a general undefined duty to repave a specified portion of the street 
by requiring a pavement of asphalt upon a concrete foundation when 
the rest of the street had been so paved by the city. Pacific Gas & 
Electric Co. v. Police Court 49 held that a requirement on a street 
railway to sprinkle the streets for a sufficient distance to prevent dust 
from flying from the operation of the cars is “generically embraced 
by the police power” and that the power so possessed was “not unrea¬ 
sonably exerted” so as to offend the requirements of due process. 

Two cases involved the location of the company’s poles and 
wires. Hardin-Wyandot Lighting Co. v. Upper Sandusky 50 affirmed 
a state decree enjoining the restoration of poles and wires previously 
taken down and forbidding new additional construction without the 
consent of the city, which consent had been made a prerequisite by 
the statute under which the company had obtained its franchise. 
Though the decision is confined to restoration and new construction, 
it does not seem to rest wholly on the reservation in the statute un¬ 
der which the franchise was derived. For Mr. Justice Clarke de-‘ 
dares: 

“We cannot doubt that the danger to life and property from 
wires carrying high tension electric current through village 
streets is so great that the subject is a proper one for regula¬ 
tion by the exercise of the police power and very certainly 
the authorities of the municipality immediately interested in 
the safety and welfare of its citizens are a proper agency to 
have charge of such regulation.” 

But this control must be exercised for legitimate police objects 
and not for the private proprietary advantage of the municipality, as 
appears from Los Angeles v. Los Angeles Gas & Electric Corpora^ 
tion . 51 Here the object of the city in ordering the removal and re¬ 
location of poles and other facilities belonging to a lighting company 
was found to be, not the protection of health and safety, but the dis¬ 
placement of the existing system with one to be constructed by the 
city. Over the dissent of Justices Pitney and Clarke, this was held 
a taking without due process of the property rights acquired under 
the franchise. The city’s contentions were said to be based upon a 

49 251 U. S. 22, 40 Sup. Ct. 79 (1919)- See 29 Yau; L. J. 57&. 

50 251 U. S. 173, 40 Sup. Ct. 104 (1919). 

51 251 U S- 32, 40 Sup. Ct. 76 (1919)- See 5 Va. L. Reg. n. s. 797. 



-58 


confusion of its governmental powers of police with its field of action 
in a proprietary or quasi-private capacity. Mr. Justice McKenna 
declares: 

“It. will be observed that we are not concerned with the 
duty of the corporation operating a public utility to yield un¬ 
compensated obedience to a police measure adopted for the 
protection of the public, but with a proposed uncompensated 
taking or disturbance of what belongs to one lighting system 
in order to make way for another. And this the Four¬ 
teenth Amendment forbids. What the grant was at its in¬ 
ception it remained and was not subject to be displaced by 
some other system, even that of the city, without compensa¬ 
tion to the corporation for the rights appropriated.” 

Of five cases relating to rate regulation, only one was directly 
concerned with the reasonableness of the particular rates fixed. This 
is Groesbeck v. Duluth S. S. & A. Ry. Co . 52 which rejected several 
special complaints adduced by the regulating authority against the 
calculations by which the district court had reached the conclusion 
that a two-cent fare would not yield the requisite fair return on fair 
value. The state wished to exclude the results of running sleeping 
and parlor cars, of operating a branch line used almost wholly for 
interstate commerce and a parallel line bought from a competitor 
and used almost wholly for freight traffic, and of running trains on 
a connecting line over which the complaining company had acquired 
traffic rights. As to the sleeping and parlor cars, Mr. Justice Bran- 
deis said that the charges are substantially uniform throughout the 
country and that it would be practically impossible and obviously 
unwise for the road to abandon the service or to increase the charges 
to cover the cost of the particular service on its line. The other traf¬ 
fic was over lines on which passengers under the statute were entitled 
to the two-cent fare, and the court thought it correct to treat all the 
lines as one, so that the more profitable parts of the system would 
carry those less profitable. In sustaining the apportionment of ex¬ 
penses between freight and passenger services when the expenses 
were common to both, Mr. Justice Brandeis recognized that no satis¬ 
factory formula had thus far been worked out and said that “for the 
present, at least, what formula the trial court should adopt presents 


“250 U. S. 607, 40 Sup. Ct. 38 (1919). 



— 59 ~ 


a question, not at law, but of fact; and we are clearly unable to sa> 
that the lower court erred in adopting the method there pursued.” 
What that method was he did not specify. 53 

The remaining cases on rate regulation deal with the procedure 
for fixing the rates and for contesting their reasonableness before the 
courts. The plaintiff in St. Louis, I. M. & S. Ry. Co. v. Williams 54 
sought shelter under the rule that the imposition of severe penal¬ 
ties as a means of enforcing a rate is in contravention of due pro¬ 
cess of law where no adequate opportunity is afforded the carrier 
for safely testing before a judicial tribunal the validity of the rate 
before liability for the penalties attaches. It failed, however, be¬ 
cause the court was aware that it might have brought a bill in equity 
against the railroad commission and have secured a suspension of 
the penalty provision during the pendency of the proceedings. The 
remaining question in the case was whether the statutory penalty of 
from $50 to $300 and a reasonable attorney’s fee for each exaction 
in excess of the rate prescribed was so unreasonable as to offend 
against the requirements of due process. Mr. Justice Van Devanter, 
speaking for all the court except Mr. Justice McReynolds, observed 
that the penalty, though large when contrasted with the overcharge 
possible in any case, might still not unreasonably be justified in view 
of the numberless opportunities of violating the statute and the need 
for securing uniform adherence to it. The fact that the penalty 
went to the aggrieved passenger and might be disproportionate to 
his loss was held to be immaterial. 55 

“ For notes on “fair value” see 20 Coeum. L. Rev. 586, and 15 Ile. L. Rev. 
45. See also Gerard C. Henderson, “Railway Valuation and the Courts”, 33 
Harv. L. Rev. 902, 1031. In 18 Mich. L. Rev. 774, is a note entitled “Public 
Utility Valuation—Cost-of-Production Theory and the World War.” This 
discusses Lincoln Gas & Electric Co. v. Lincoln, 250 U. S. 256, 39 Sup. Ct. 
454 (1919), and United States v. Interstate Commerce Commission, 252 
U. S. 178, 40 Sup. Ct. 187 (1920), 19 Mich. L. Rev. 26. note 46. Issues 
between state and local authorities in respect to fixing rates are considered 
in 5 Cornele L. Q. 354, and 15 Iu.. L. Rev. 100. References to notes on prior 
contracts fixing rates with respect to their effect on the desires of public utili¬ 
ties for an increase or the desires of local authorities to prevent central 
authorities from allowing an increase of rates will be given in the section 
daling with “Retroactive Civil Legislation.” 

“251 U. S. 63, 40 Sup. Ct. 71 (1919). 

“For other questions of procedure and of judicial interference, see 8 
Calie. L. Rev. 180, 33 Harv. L. Rev. 107, and 68 U. Pa. L. Rev. 287. 



6o — 


The complainant in Ohio Valley Water Co. v. Ben Avon Borough 50 
was more fortunate. Under the procedure offered by the state stat¬ 
ute the company had appealed from the commission to the superior 
court of the state and had the order of the commission set aside and 
the appraisal of its property raised. The state supreme court re¬ 
versed the court below, holding that there was competent evidence 
tending to support the commission’s conclusion and that no abuse of 
discretion appeared. This action was thought by a majority of the 
United States Supreme Court to be based on an interpretation of the 
state statute which withheld from the court power to determine the 
quesion of confiscation according to its independent judgment when 
the action of the commission is considered on appeal. Such limita¬ 
tion on the reviewing power of the court was held to make the pro¬ 
cedure wanting in the requisites of due process. The court was un¬ 
able to satisfy itself that there was any adequate alternative method 
of testing the validity of the rates by proceedings in equity and so 
sent the case back to the state court, declaring that the plaintiff "‘has 
not yet had proper opportunity for an adequate judicial hearing as 
to confiscation; and unless such an opportunity is now available, and 
can be definitely indicated by the court below in the exercise of its 
power finally to construe the laws of the state including of course 
section 31 [the section relating to proceedings in equity], the chal¬ 
lenged order is invalid.” 

For the minority, consisting of himself and Justice Holmes and 
Clarke, Mr. Justice Brandeis urged that the proceedings in equity 
were adequate and that the order was not invalid for absence of op¬ 
portunity for full judicial review. He insisted therefore that the 
order must be affirmed ‘'unless, as contended, the claim of confisca¬ 
tion compels this court to decide, upon the weight of the evidence,” 
whether or not the company’s “property has been undervalued, or 
unless some error of law is shown.” On this question, Mr. Justice 
Brandeis applied the general rule that on writs of error from a state 
court the Supreme Court must take the facts as found below. As 
the only disputed question was the value of the property, he insisted 
that the case did not come within the exception that the Supreme 
Court may “upon writ of error to a state court ‘examine the entire 
record, including the evidence, to determine whether what purports 


69 253 U. S. 


40 Sup. Ct. 527 (1920). 



— 6i — 


to oe a finding’ upon questions of fact is ‘so involved with and de¬ 
pendent upon questions of federal law as to be really a decision’ of 
the latter.” Even in such case, he added, the Supreme Court must 
be actuated by the purpose, not to pass upon the relative weight of 
conflicting evidence and to substitute its judgment thereon for that 
of the court below, but “to ascertain whether a finding was unsup¬ 
ported by evidence, or whether evidence was properly admitted or 
excluded, or whether in some other way a ruling was involved which 
is within the appellate jurisdiction” of the Supreme Court. From 
this it would appear that what the Fourteenth Amendment requires 
by way of procedure is an opportunity for a judicial hearing on 
questions of fact in some court and not necessarily in some federal 
court or in any appellate tribunal. Whether the majority would 
agree with this is not certain, since their disposition of the case did 
not require them to affirm or to contradict it. The problem is one 
on which the law is still soft because of uncertainty as to how far 
the recognized exceptions cut in to the recognized general rule. 

Inadequate procedure was found also in Oklahoma Operating Co. 
v. Love 57 and in Oklahoma Gin Co. v. Oklahoma 58 in which injunc¬ 
tions were issued against orders of the state railroad commission 
enforcing prescribed rates and penalizing disobedience. Under the 
statute in force when the proceedings were instituted the complain¬ 
ants had no opportunity to contest the reasonableness of the rates 
before a judicial body except on appeal from proceedings before 
the commission for contempt. The penalties if the appeal were un¬ 
successful might be $500 for each overcharge and $500 additional 
for each day’s continuance of refusal to charge not more than the 
rates fixed. In the words of Mr. Justice Brandeis, they “are such 
as might well deter even the boldest and most confident.” Before 
these cases reached the Supreme Court, Oklahoma had seen the error 
of its ways and had provided for direct appeal to the Supreme Court 
from the order of the commission. But as the plaintiff was rightly 
in the federal courts, the suit was ordered to proceed for a determi¬ 
nation of the question whether the rates were confiscatory. If such 
is the conclusion of the district court, it is to enjoin their enforce¬ 
ment in any way. If it finds them not confiscatory, it is still to en- 

61 252 U. S. 331, 40 Sup. Ct. 338 (1920). See 18 Mich. L. Rev. 804. 

**252 U. S. 339, 40 Sup. Ct. 341 (1920). 




-62 — 


join the enforcement of the penalties accrued pendente life, provided 
it finds that the plaintiff had reasonable grounds to contest the rates 
as confiscatory. 

The statute involved in these two cases was one defining as a pub¬ 
lic business subject to price fixing any business which by reason of 
its nature, extent, or the exercise of a virtual monopoly therein, is 
such that the public must use the same or its services. One com¬ 
plainant ran a laundry and the other was ginning cotton, having 
combined with competitors to raise prices. The laundry concern 
had urged before the commission that it was not a monopoly within 
the section of the statute in question and that the section was void. 
This seems to be an assertion of an immunity from price fixing; 
but on the most interesting question whether a laundry can be sub¬ 
jected to rate regulation like an elevator or a railroad, the Supreme 
Court says not a word. It declared, however, that the commission 
might proceed to investigate the plaintiff’s rates and practices, “so 
long as its findings and conclusions are subjected to the review of the 
District Court herein.” It can hardly be credited that all the mem¬ 
bers of the court would consent to the implication that the mere fact 
that the public must use a laundry makes its charges constitutionally 
subject to regulation by a commission. Yet the handling of the case 
in the opinion of Mr. Justice Brandeis is such that it would not be 
surprising if some of the judges later adduce it as a precedent in favor 
of the subjection to price-fixing of any business so situated that for 
a time it is relieved from the competition that keeps its charges rea¬ 
sonably close to what would be enough to attract competitors into 
the enterprise if the way were open to them . 59 

Direct or indirect regulations of commercial intercourse were 
approved in four cases. In Munday v. Wisconsin Trust Co . e0 the 
power to impose conditions on the doing of business by foreign cor¬ 
porations not engaged in interstate commerce was affirmed and ap¬ 
plied to a provision invalidating deeds of land within the state to 
foreign corporations not admitted to do business. The fact that the 
deed was executed and delivered in another state was said to make 
no difference, since the court had long ago declared that “the title 

" For discussions of the extension of price fixing see references in note 
44, supra, and notes in 33 Harv. L. Rev. 838, 861. 

**252 U. S. 499, 40 Sup. Ct. 365 (1920). 




— 63 — 


to land can be acquired and lost only in the manner prescribed by the 
law of the place where such land is situate.” Dunbar v. City of New 
York® 1 found no offence against due process in giving the city a lien 
on the premises to which water is furnished, even though the meter 
is installed at the request of the tenant rather than of the owner. A 
statute forbidding the personal solicitation of employment to “prose¬ 
cute, defend, present or collect” claims was sustained in McCloskey 
v. Tobin.® 2 Mr. Justice Brandeis pointed out that prohibition of 
solicitation did not prohibit the business but merely regulated it. He 
added that “the evil against which the regulation is directed is one 
from which the English law has long sought to protect the com¬ 
munity through proceedings for barratry and champerty” and that 
“regulation which aims to bring the conduct of the business into 
harmony with ethical practice of the legal profession, to which it is 
necessarily related, is obviously reasonable .” 63 

The remaining case belongs under the head of industrial rela¬ 
tions. This is Ne7v York Central R. Co. v. Bianc 64 which sustained 
the provision in the New York Workmen’s Compensation Law al¬ 
lowing the commission to award damages for permanent facial dis¬ 
figurement. Mr. Justice Pitney thought it most likely that any seri¬ 
ous disfigurement would impair earning power, irrespective of its 
effect on mere capacity to work. But the absence of any finding of 
such impairment in the case before him moved him to declare that 
impairment of earning capacity is not essential to the constitu¬ 
tionality of an award. He added that the state was at entire liberty 
to choose whether the award for disfigurement should be paid in a 
single sum or in instalments and whether it should be made in com¬ 
bination with the compensation for inability to work computed with 
reference to loss of earning power or independently thereof. Under 

61 251 U. S. 516, 40 Sup. Ct. 250 (1920). 

62 252 U. S. 107, 40 Sup. Ct. 306 (1920). See 6 Va. L. Reg. n. s. 213, 
and 2g Yale L. J. 680. 

63 See James W. Simonton, “The Validity of Special Legislation Granting 
Admission to a Profession”, 26 W. Va. L. Q. 102. The attorney’s lien law 
of Pennsylvania is considered in 68 U. Pa. L. Rev. 277; a discriminatory 
exemption law, in 19 Cobum. L. Rev. 502; a law forbidding the refilling of 
marked bottles, in 18 Mich. L. Rev. 546. 

“250 U. S. 596, 40 Sup. Ct. 45 (1919). See 33 Harv. L. Rev. 473 , 18 
Micii. L. Rev. 235, and 29 Yale L. J. 581. 



— 6 4 — 

the statute the award might be such sum as the commission deems 
proper, up to $3,500. Mr. Justice McReynolds dissented but wrote 
no opinion. His dissent is doubtless dependent on the fact that the 
statute imposes liability on the employer irrespective of negligence, 
as there could be no question about damages for such injuries when 
the person mulcted is at fault. 65 

This is an unusually small grist of police power cases for the 
Supreme Court to grind out in a term. Normally it considers more 
police power questions on a wider variety of subjects. It may be 
useful to list those subjects, if only to have pegs on which to hang 
footnotes to discussions in law reviews on decisions in other courts. 
One is the regulation of “rights of action,” but this is more conveni¬ 
ently dealt with in a later section on Jurisdiction and Procedure of 
Courts. Another is “occupations and professions” under which 
McCloske y v. Tobin 66 might have been put. A third is “physical 
conditions” 67 which might embrace a number of the cases put under 
the head of public utilities. For the rest we have “food and drink,” 68 

“The Arizona Workmen’s Compensation Law, which was declared con¬ 
stitutional in Arizona Copper Co. v. Hammer, (Arizona Employers’ Liability 
Cases), 250 U. S. 400, 39 Sup. Ct. 553 (1919), is considered in 20 Colum. 
L. Rev. 89, 33 Harv. L. Rev. 86, 18 Mich. L. Rev. 316, and 29 Yale L. J. 225. 

See 68 U. Pa. L. Rev. 363 for a note on a Rhode Island case declaring 
unconstitutional a statute requiring theatre proprietors to employ a fire guard 
approved by fire commissioners at a compensation provided in the statute. 

“Note 62, supra. 

m See O. L. Waller, “Right of State to Regulate the Distribution of Water 
Rights”, 90 Cfnt. L. J. 97. See 20 Colum. L. Rev. 350 for discussion of a 
case holding invalid an ordinance confining care of cemetery lots to superin¬ 
tendent. See 4 Minn. L. Rev. 540 for note on case declaring unconstitu¬ 
tional an ordinance forbidding the erection of a public garage without the 
consent of adjoining landowners. A case holding a public garage to be a 
nuisance is discussed in 18 Mich. L. Rev. 234, and a similar condemnation 
of a morgue is treated in 33 Harv. L. Rev. 613. 

68 See Minor Bronaugh, “Limiting or Prohibiting the Possession of In¬ 
toxicating Liquors for Personal Use”, 23 Law Notes 67, and Lindsay Rogers, 
“‘Life, Liberty, and Liquor’: A Note on the Police Power”, 6 Va. L. Rev. 
156. Barbour v. Georgia, 249 U. S. 454 , 39 Sup. Ct. 316 (1919), sustaining a 
statute prohibiting possession of liquor acquired after its enactment is com¬ 
mented on in 6 Va. L. Rev. 60. 



-6s- 


"social and moral interests/’ 69 and "methods of enforcement.’’ 70 
Any classification of police power questions is necessarily somewhat 
arbitrary, but the law of the police power as a whole is so amorphous 
that even a poor way of classifying is better than none. 71 

V. Eminent Domain 

In four of the cases already considered there was complaint that 
the unwelcome interferences were takings which required compen¬ 
sation. In none of them did the government profess to be exercising 
the power of eminent domain. In Hamilton v. Kentucky Distilleries 
& Warehouse Co. 72 which sustained the War Prohibition Act of 
November 21, 1918, Mr. Justice Brandeis said that "there was no 
appropriation of the liquor for public purposes.” He pointed out 
that it had never been necessary to decide whether an absolute prohi¬ 
bition of the sale of liquor acquired before the enactment of the pro¬ 
hibitory law is proper and that the question did not arise in the 
case at bar since the law did not become effective until over seven 
months after it was passed. The fact that liquor could not be ad¬ 
vantageously sold till well ripened or aged was called a "resulting 
inconvenience to the owner attributable to the inherent qualities of 
the property itself,” which "cannot be regarded as a taking of prop¬ 
erty in the constitutional sense.” The point came up again in Rup - 
pert v. Caffey 73 which sustained the Volstead Act. The plaintiff 
contended that "even if immediate prohibition of the sale of its non- 

09 See 33 Harv. L. Rev. 108 for discussion of a state anti-loafing law; 4 
Minn. L. Rev. 449 on prohibiting foreign languages in public schools; 33 
Harv. L. Rev. 108 on denying to aliens privilege of running pool rooms; 33 
Harv. L. Rev. no on state law against inciting hostility to the United States; 
18 Mich. L. Rev. 796 on prohibiting display of flag of organization hostile 
to our form of government; and 29 YaeE L. J. 936 on protection of the 
United States flag from desecration. 

19 See 5 Iowa L. Bun.. 63 for note on power of health board to detain per¬ 
sons afflicted with venereal disease, and 6 Va. L. Rev. 583 for discussion of 
forfeiture of property of innocent persons used in violation of law. 

n For a general article on police power see Thomas Reed Powell, “The 
Police Power in American Constitutional Law”, 1 Journ. Comp. Leg. and 
Int. Law. (part 3) 160. 

”251 U. S. 146, 40 Sup. Ct. 106 (1919), 19 Mich. L. Rev. 8, note n. 

”251 U. S. 264, 40 Sup. Ct 141 (1920), 19 Mich. L. Rev. 9, note 12. 



— 66 — 


intoxicating beer is within the war power, this can be legally ef¬ 
fected, only provided compensation is made.” Mr. Justice Branded 
called attention to the fact that in one of the earliest cases one of the 
judgments affirmed was “for violation of the act by selling beer ac¬ 
quired before its enactment.... and that it was assumed without dis¬ 
cussion that the same rule applied to the brewery and its product.” 
He then continued: 

“But we are not required to determine here the limits in 
this respect of the police power of the states; nor whether the 
principle is applicable here under which the federal govern¬ 
ment has been declared to be free from liability to an owner, 
‘for private property injured or destroyed during war, by the 
operations of the armies in the field, or by measures neces¬ 
sary for their safety and efficiency’... ; in analogy to that by 
which states are exempt from liability for the demolition of a 
house in the path of a conflagration... ; or for garbage of 
value taken... ; or for unwholesome food of value destroyed 
... for the preservation of the public health. Here as in 
Hamilton v. Kentucky Distilleries & Warehouse Co., supra , 
there was no appropriation of private property, but merely a 
lessening of value due to a permissible restriction imposed 
upon its use.” 

This is plainly a stretch of the Kentucky Distilleries case, since 
the Volstead Act became effective on its passage. There is nothing 
in the dissenting opinion in the Ruppert case indicating specifically 
that the objectors would have been mollified if the Volstead Act had 
provided compensation, though Mr. Justice McReynolds refers to 
the Fifth Amendment and the “well settled rights of individuals in 
harmless property.” 

In Board of Public Utility Commissioners v. Ynchausti & Co 74, 
which sustained a requirement of free carriage of the mails from 
vessels engaged in the Philippine coasting trade, the Chief Justice 
said that “it is impossible to conceive how either the guaranty by the 
Bill of Rights of due process or its prohibition against the taking of 
private property for public use without compensation can have the 
slightest application to the case if the Philippine government possess- 

74 251 U. S, 401, 40 Sup. Ct. 277 (1920), 19 Mich. L. Rev. 20, note 32. 



- 6 7 - 


ed the plenary power, under the sanction of Congress, to limit the 
right to engage in the coastwise trade to those who agree to carry 
the mails free.” This, no logician would deny. This plenary power 
having been found, the claim to compensation was denied. But the 
Chief Justice lays down that if the power had not been plenary as 
stated, the requirement could not have been sustained “because by 
accepting a license the shipowners voluntarily assumed the obligation 
of free carriage.” But in Los Angeles v. Los Angeles Gas & Electric 
Corporation 15 in which the police power was held not to justify an 
order to remove poles and wires to make room for those of a com¬ 
peting municipal system, there was held to be a taking which was 
unjustified in the absence of compensation. This is to say that what 
the city tried to do under the police power, it might do only by an 
exercise of eminent domain. 76 

In Hays v. Port of Seattle ™ too, a point of eminent domain was 
indirectly involved. What was alleged to be an impairment of the 
obligation of a contract was held to be a breach or repudiation of the 
contract, leaving such obligation as it had still outstanding. This ob¬ 
ligation still formed the measure of the right to recover damages. 
No denial of due process was involved because whatever property 
rights were taken were taken for a public purpose, and the provision 
in the state statutes for suing the state and having the judgment paid 
out of the state treasury “satisfies the requirement of due process of 
law as clearly as if the ascertainment of compensation had preceded 
the taking.” 

For this, Mr. Justice Pitney cited Bragg v. Weaver , 78 decided a 


"Note Si, supra. 

78 For other notes on whether there has been such a “taking” as to require 
compensation see 33 Harv. L. Rev. 451 , 476, and 29 Yaee L. J. 431- 

The determination of what is “just compensation” is considered in 19 
Coeum. L. Rev. 492, 33 Harv. L. Rev. 981, 18 Mich. E. Rev. 61, 799, and 
68 U. Pa. L. Rev. 186. 

Cases holding it a “public use” to condemn land against use for apart¬ 
ment houses are discussed in 20 Coeum. L. Rev. 219, 591, 5 Corneee L. Q. 330, 
18 Mich. L. Rev. 523, 4 Minn. L. Rev. 50, 236, and 29 Yaee L. J. 93b. 

See also William E. Britton, “Constitutional Changes in Eminent Domain 
in Illinois”, 2 Iee. L. Buee. 497 - 

”251 U. S. 233, 40 Sup. Ct. 125 (1920). 

78 251 U. S. 57, 40 Sup. Ct. 63 (1919). See 5 Va. L. Reg. n. s. 793 , and 29 
Yaee L. J. 577 . 



— 68 


month earlier. Here a landowner who sought an injunction against 
taking earth from his land to repair the highway objected that the 
statute under which it was done “makes no provision for affording 
the owner an opportunity to be heard respecting the necessity or ex¬ 
pediency of the taking or the compensation to be paid.” After re¬ 
marking that it was conceded that the taking was for a public use 
and that adequate provision was made for the payment of such com¬ 
pensation as may be awarded, Mr. Justice Van Devan ter declares: 

“Where the intended use is public, the necessity and expedi¬ 
ency of the taking may be determined by such agency and in 
such mode as the state may designate. They are legislative 
questions, no matter who may be charged with their decision, 
and a hearing thereon is not essential to due process in the 
sense of the Fourteenth Amendment.” 

With respect to compensation he continues: 

“But it is essential to due process that the mode of deter¬ 
mining the compensation be such as to afford the owner an 
opportunity to be heard. Among several admissible modes is 
that of causing the amount to be assessed by viewers, subject 
to an appeal to a court carrying with it a right to have the mat¬ 
ter determined upon a full trial.... And where this mode is 
adopted due process does not require that a hearing before 
the viewers be afforded, but is satisfied by the full hearing 
that may be obtained by exercising the right to appeal.” 

These requirements were found to be satisfied by the procedure 
offered by the Virginia statutes. These had not been construed by 
the state court, but the only question was whether the landowner was 
sufficiently protected in his chance to get his appeal to the court from 
the decision of the supervisors on the award of the viewers. Mr. 
Bragg seemed to fear that his rights might be foreclosed without 
his knowledge if he were not present when the supervisors decided 
how much to pay him. But the court found that under such cir¬ 
cumstances he was to be notified and was entitled to thirty days in 
which to appeal. It was assumed that if he were actually present at 
the supervisors’ meeting, he had sufficient notice and that thirty days 
from then was long enough in which to appeal. The claim that the 


— 69 - 

determination of compensation must precede the actual taking was 
dismissed by saying: 

“But it is settled by the decisions of this court that where 
adequate provision is made for the certain payment of the 
compensation without unreasonable delay the taking does not 
contravene due process of law because it precedes the ascer¬ 
tainment of what compensation is just.” 

It is to be remembered that Mr. Justice Van Devanter’s general 
statements throughout the opinion are made with reference to an 
exercise of eminent domain by public, and not by private, authori¬ 
ties. 


PART IIP 


VI. Retroactive Civil Legislation 

F IVE of the corporations which fought in vain against exercises 
of the police power profited nothing from their grasp at the 
obligation-of-contracts clause. In Milwaukee Electric Ry. & Light 
Co. v. Wisconsin 2 the contract relied on was a clause in the charter 
of a street railroad imposing on it the duty to keep the space between 
and near its tracks in good repair “with the same material as the 
city shall have last used to pave or repave these spaces and the 
street previous to such repairs, unless the railway company and 
the board of public works of said city shall agree upon some other 
material, and said company shall then use the material agreed 
upon.” The company contended that “its obligation is, in any event, 
limited to repaving with such material as the city had last used 
between the rails.” Mr. Justice Brandeis, for all the court except 
Justices Pitney and McReynolds, answered: “This would put upon 
the city the burden of paving the whole street in case of any inno¬ 
vation in paving save by agreement of the company and the city. 
It is not a reasonable construction of the ordinance.” This makes 
the phrase “these spaces and the street” equivalent to “these spaces 
or the street.” The pavement required of the company was the 
same as that which the city had laid on all the street but the railway 
zone. The complaint of the road that the expense would reduce 
its income below a reasonable return on its investment was answered 
by saying that “there is no warrant in law for the contention that 
merely because its business fails to earn full six per cent upon the 
value of the property used, the company can escape either obliga¬ 
tions voluntarily assumed or burdens imposed in the ordinary exer¬ 
cise of the police power.” 

The contract relied on in Hardin-Wyandot Lighting Co. v. Upper 
Sandusky* * was the statute in force in 1889 when the company ’s 

*For the previous installments reviewing cases on Miscellaneous Federal 
Powers, Regulation of Commerce, Taxation, Police Power and Eminent 
Domain, see 19 Mich. L. Rev. 1-24, 117-151 (November and December, 1920). 
*252 U. S. 100, 40 Sup. Ct. 306 (1920), 19 Mich. L. Rev. 138. 

*252 U. S. 173, 40 Sup. Ct. 104 (1919), 19 Mich. L. Rev. 139. 



- 72 - 


franchise was granted and accepted. This declared that the “mode’' 
of use of the streets “shall be such as shall be agreed upon between 
the municipal authorities of the . . . village and the company, but 
if they cannot agree, the probate court of the county shall direct 
what the mode of use shall be.” In 1896 the state law was amended 
so that it forbade the construction or maintenance of wires, fixtures 
and appliances for conducting electricity without the consent of the 
municipality. In 1913 the company took down certain poles and 
wires used for lighting the streets. The Supreme Court held that 
it could not restore these or erect new additional ones without 
obtaining the consent of the city; but it interpreted the injunction 
granted below as not applying to the repair and replacing of poles 
and wires which had been continuously used for commercial light¬ 
ing and affirmed the judgment of the state court with the qualifica¬ 
tion, “restrained to the scope of its opinion, as we have interpreted 
it.” The case thus rests on the abandonment by the company of 
its rights under the ordinance of 1889 in its poles and wires used 
for street lighting. The statute of 1896, requiring the consent of 
the city, is sustained as a reasonable exercise of the police power; 
such modification of the company’s rights as it may suffer from 
the decree of the state court is said “not to constitute an impairing 
of the obligation of its contract with the state or village.” In Pacific 
Gas & Electric Co. v. Police Court 4 the only contract right adduced 
against a municipal command to sprinkle the streets was the general 
authority conferred by the franchise to operate a road in the streets; 
but the ordinance was found to be within the police power, and the 
police power was said to dominate the right of the company under 
its franchise to use the streets. 

In two cases the contracts unsuccessfully relied on were with pri¬ 
vate persons rather than with some public authority. Munday v. 
Wisconsin Trust Co. 5 sustained the state court in holding a deed 
invalid because the grantee was a foreign corporation which had 
failed to file the requisite papers with the state in which the land 
lay. As the obstructing statute was in force before the transaction 
in question, the court reminded the aggrieved litigant that “the 
settled doctrine is that the contract clause applies only to legislation 


“251 U. S. 22, 40 Sup. Ct. 79 (1919), T9 Mich. L. Rev. 139. 
“252 U. S. 499, 40 Sup. Ct. 365 (1920), 19 Mich. L. Rev. 144. 



— 73 — 


subsequent in time to the contract alleged to have been impaired/* * 
Before the suit began the grantee had obtained a license to do busi¬ 
ness and hold property within the state, but the state court had 
held that this did not validate prior invalid transactions. This was 
said by the Supreme Court to be wholly a matter of state law and 
to involve no right under the Constitution or laws of the United 
States. 

In Producers 9 Transportation Co. v. Railroad Commission 6 the 
plaintiff had previously fixed its rates by private contract and now 
insisted that it was not a common carrier; but the court disagreed 
with it and allowed the state railroad commission to take it in hand. 
Mr. Justice Van Devanter reiterated the well-settled rule that “a 
common carrier cannot, by making contracts for future transporta* 
tion or by mortgaging its property or pledging its income, prevent 
or postpone the exertion by the state of the power to regulate the 
carrier’s rates and practices.” To make the matter certain, he added: 
“Nor does the contract clause of the Constitution impose any obstacle 
to the assertion of that power.” 

In three cases the contract clause was grasped not as a mere 
makeweight but as the only hope against legislation concededly 
within the general police power. In Bank of Oxford v. Love 1 it 
was recognized that the charter of a bank was a contract, but the 
provision that the business shall be controlled by the stockholders 
under such rules and regulations as the company may see fit to 
adopt was held not to confer any immunity from a statute requiring 
periodic examination by the state banking department and the impo¬ 
sition of moderate fees for the maintenance of the scrutinizing 
agency. 

In Piedmont Power & Light Co. v. Graham 8 the plaintiff attempted 
unsuccessfully to spell out an exclusive franchise from a provision 
in its charter that the town “warrants that it will, by its proper 
authorities, provide for the full and free use of its streets, lanes,” 
etc. Mr. Justice Clarke called the contention “fatuous and futile,” 
and declared that “grants of rights and privileges by a state or 
municipality are strictly construed and whatever is not unequivo- 


•251 U. S. 228, 40 Sup. Ct. 131 (1920), 19 Mich. L. Rev. 137. 
7 250 U. S. 603, 40 Sup. Ct. 22 (1919). 

*253 U. S. 193, 40 Sup. Ct 453 (1920). 



-74 — 


cally granted is withheld; nothing passes by implication.” The 
alleged federal question was found so frivolous that the appeal 
from the court below was dismissed for want of jurisdiction. 

A similar summary disposition was given to the appeal in Cuya¬ 
hoga River Power Co. v. Northern Ohio T. & L. Co . 9 A water¬ 
power company which had been granted the right of eminent domain 
was told that it acquired no exclusive right to any particular lands 
by filing with its articles of incorporation a plan specifying the 
places where it planned to erect dams. “The contention of plain¬ 
tiff,” observes Mr. Justice McKenna, “is certainly a bold one, and 
seemingly erects into a legal principle that unexecuted intention, or 
partly executed intention, has the same effect as executed intention, 
and that the declaration of an enterprise gives the same right as its 
consummation.” The acts of a competing company of which ihe 
frustrated plaintiff complained were held not acts that might be 
attributed to the state as an impairment of plaintiff’s contract. No 
wrong was done the plaintiff by incorporating other power com¬ 
panies under the same general law or by sanctioning the transfer 
of the rights and franchises of a corporation older than itself to one 
younger. 

The contract clause was one of the supports picked out by the 
successful lighting company in Los Angeles v. Los Angeles Gas & 
Electric Corporation , 10 and figured at least indirectly in the decision. 
The case held that the city could not compel the company to remove 
poles and wires to make room for a competing municipal system. 
Since the attempt was not a valid police measure and was unaccom¬ 
panied by any proffer of compensation, it was held to be inhibited 
by the Fourteenth Amendment. But the property rights thus 
wrongfully threatened seem to be regarded as not confined to prop¬ 
erty acquired for the purpose of exercising the powers conferred 
by the franchise, but to embrace also property rights in the fran¬ 
chise itself. To quote Mr. Justice McKenna: 

“A franchise conveys rights, and if their exercise could 
be prevented or destroyed by a simple declaration of a muni¬ 
cipal council, they would be infirm indeed in tenure and 

*252 U. S. 388, 40 Sup. Ct. 404 (1920). 

10 251 U. S. 32, 40 Sup. Ct. 76 (1919), 19 Mich. L. Rev. 139. Justices 
Pitney and Clarke dissent. 



— 75 


substance. It is to be remembered that they came into exist¬ 
ence by compact, having, therefore, its sanction, urged by 
reciprocal benefits, and are attended and can only be exer¬ 
cised by expenditure of money, making them a matter of 
investments and property, and entitled as such against,being 
taken without the proper process of law—the payment of 
compensation.” 

The distinction between a breach of contract and an impairment 
of its obligation finds illustration in Hays v. Port of Seattle 11 
already considered in the section on eminent domain. Back in 1896 
the plaintiff made a contract with the state for excavating part of 
Seattle harbor, the state engaging “to hold the lands subject to the 
operation of the contract pending its execution, and subject to the 
ultimate lien of the contractor thereon.” After long delay and dis¬ 
agreement as to plans, the state in 1913 turned the property over to 
the Port of Seattle, which proceeded to go ahead with the excava¬ 
tion on its own account. This was held to be nothing but a possible 
breach by the state of its contract with the plaintiff, Mr. Justice 
Pitney observing: 

“Supposing the contract had not been abandoned by com¬ 
plainant himself or terminated by his long delay, its obliga¬ 
tion remained as before, and formed the measure of his right 
to recover from the state for the damages sustained.” 

As the state by general law provided ample opportunity to sue and 
to collect a judgment against it, and the infliction on the plaintiff, 
if any, was for a recognized public purpose, an injunction was 
denied and the plaintiff left to his action for damages. 

Two of the tax cases already treated dealt also with objections 
to retroactive legislation. The plaintiff in Oklahoma Ry. Co. v. 
Severns Paving Co . 12 was told that its charter obligation to pave a 
portion of its right of way implied no agreement on the part of the 
city that prevented a special assessment on the railroad right of 
way to defray part of the expense of paving the main portion of 

”251 U. S. 233, 40 Sup. Ct. 125 (1920), 19 Mich. L. Rev. 149. 

12 251 U. S. 104, 40 Sup. Ct. 73 (i9to), to Mich. U Rev. 129. 



— 76 — 


the street. Ward v. Love County 13 reiterated the point established 
earlier 14 that a tax exemption of Indian lands granted by Congress 
was a property right which could not, consistently with due process 
of law, be taken away by withdrawal of the exemption. This was 
not directly in issue in the principal case, as the dispute was over 
the question whether the taxes which the Indians sought to get 
back had been paid voluntarily. Another case in which a tax exemp¬ 
tion, concededly contractual, was held to cover the particular prop¬ 
erty in question is Central of Georgia Ry. Co. v. Wright.™ This was 
a rehearing of a portion of a case 10 decided the preceding term. 
The opinion is merely a postscript to its predecessor and cannot be 
understood independently. 17 

VII. Immunities oe Persons Charged with Crime 

The unanimity with which the Supreme Court sustained convic¬ 
tions under the Espionage Law in 1918-1919 is broken in upon in 
1919-1920. The minority judges, however, do not fully indicate 
how much of their dissent is based on the First Amendment and 
how much goes only to the propriety of the convictions under the 
terms of the statute and the general canons of criminal law. The 

“253 U. S. 17, 40 Sup. Ct. 419 (1920), 19 Mich. L. Rev. 133. To the 
same effect is Broadwell v. Carter County, 253 U. S. 25, 40 Sup. Ct. 422 (1920). 

14 Choate v. Trapp, 224 U. S. 665, 32 Sup. Ct. 565 (1912). 

15 250 U. S. 519, 40 Sup. Ct. 1 (1919). 

“Central of Georgia Ry. Co. v. Wright, 248 U. S. 525, 39 Sup. Ct. 181 
(1919), 14 Am. Poe. Sci. Rev. 63. 

1T For notes on Union Dry Goods Co. v. Georgia, 248 U. S. 372, 39 Sup. 
Ct. 117 (1919), 14 Am. Poe. Sci. Rev. 61, holding that a public utility can not 
by contract with its patrons defeat the power of rate regulation, and Columbus 
Ry. Power & Light Co. v. Columbus, 249 U. S. 399 , 39 Sup. Ct. 349 (1919). 
13 Am. Poe. Sci. Rev. 632, holding that a company cannot escape from a 
clause in its franchise restricting the fare to be charged, notwithstanding the 
increase of operating costs incident to conditions produced by the war, see 
33 Harv. L< Rev. 97, 116. The latter case is considered in 18 Mich. L. Rev. 
320. For discussions of the power to fix rates by contract in the grant of a 
franchise and the power of state authorities to permit an increase of 
rates as against a contract between the company and a city, and other 
phases of the same general problem, see Charles K. Burdick, “Regulating 
Franchise Rates,” 29 YaeE L. J. 589, N. C. Collier, “Change of Rates of Public 
Utility Which Have Been Fixed by Franchise Ordinance,” 90 Cent. L. J. 
42, Clarence Dallam, “The Public Utility and the Public Highway,” 6 Va. 



— 77 - 


offense in the cases was committed by publishing or distributing 
literature that contained unflattering remarks about the motives and 
justifications for American participation in the war or that covertly 
or directly encouraged or advised restraint from actions that would 
aid in its prosecution. In Abrams v. United States 18 it was laid 
down by Mr. Justice Clarke for the majority that the only question 
before the court was whether “there was some evidence, competent 
and substantial, before the jury, fairly tending to sustain the ver¬ 
dict.” There was denunciation of the President as vehement as any 
in a journal devotedly dedicated to uncomplimentary shafts in that 
direction. The court, however, refrained from passing on the pro¬ 
priety of the convictions on the counts charging “disloyal, scurril¬ 
ous and abusive language about the form of government of the 
United States,” or language “intended to bring that government 
into contempt, scorn, contumely, and disrepute.” Mr. Justice Clarke 
remarked that “a technical distinction may perhaps be taken between 

L. Rev. 35, Godfrey Goldmark, “The Struggle for Higher Public Utility 
Rates Because of War-time Costs,” 5 Cornell L. Q. 227, A. Raymond San¬ 
born, “The Power of the Public Utilities Commissions to Alter Rates,” 13 
Maine L. Rev. i, and editorial notes in 20 Colum. L. Rev. 704, 5 Iowa L. B. 
265, 18 Mich. L. Rev. 806, 4 Minn. L. Rev. 526, 68 U. Pa. L. Rev. 280, and 26 
W. Va. L. Q. 67. 

For a discussion of United Railroads v. San Francisco, 249 U. S. 517, 39 
Sup. Ct. 361 (1919), 14 Am. Pol. Sci. Rev. 60, holding that a statute forbid¬ 
ding two railroads to occupy the same street does not enter into a franchise as 
a promise on the part of the municipal grantor not to compete with the 
grantee, see 33 Harv. L. Rev. 576, 614. The effect on a contract with a city 
for reduced fares for workmen of a statute prohibiting discrimination is con¬ 
sidered in 29 Yale L. J. 503. The retroactive effect of soldiers’ and sailors’ 
relief acts is discussed in 4 Minn. L. Rev. 353; the amendment of statutes of 
limitation, in 29 Yale L. J. 91 ; and the retroactive taking away of a right of 
action for wrongful death in another state, in 33 Harv. L. Rev. 727. 

18 250 U. S. 616, 40 Sup. Ct. 17 (1919). See Zechariah Chafee, jr., Free¬ 
dom of Speech (New York, Harcourt, Brace and Howe, 1920), Chapter 3, “A 
Contemporary State Trial”, 33 Harv. L. Rev. 747, Edward S. Corwin, “Free¬ 
dom of Speech and Press Under the First Amendment”, 30 Yale L. J. 48, 
“Constitutional Law in 1919-1920, 14 Am. Pol. Sci. Rev. 635, at pp. 655-658, 

M. G. Wallace, “Constitutionality of Sedition Laws”, 6 Va. L. Rev. 385, John 
H. Wigmore, “Abrams v. United States: Freedom of Speech and Freedom of 
Thuggery in War-time and Peace-time”, 14 III. L. Rev. 539, and notes in 20 
Colum. L. Rev. 90, 33 Harv. L. Rev. 442, 474, 14, III. L. Rev. 601, 18 Mich, 
L. Rev. 236, 5 Va. L. Reg. n. s. 715, 29 Yaee L. J. 337, and 30 Yale L. J. 68. 



- 78 - 


disloyal and abusive language applied to the form of our govern¬ 
ment or language intended to bring the form of our government 
into contempt and disrepute, and language of like character and 
intended to produce like results directed against the President and 
Congress, the agencies through which that form of government must 
function in time of war. ,, But he did not press the point, as he 
found the language fully sufficient to warrant conviction on the 
counts charging utterances intended to provoke resistance to the 
United States in time of war and advocating the curtailment of pro¬ 
duction of ordnance and munitions necessary and essential to the 
prosecution of the war. This was enough to sustain the sentences, 
as they did not exceed those that might be imposed for conviction 
on these counts alone. Among the exhortations of the defendants 
were the following: 

“Yes, friends, there is only one enemy of the workers of 
the world, and that is CAPITALISM. . . . 

With the money which you have loaned or are going to 
loan them they will make bullets not only for the Germans 
but also for the Workers’ Soviets of Russia. Workers in 
the ammunition factories, you are producing bullets, bayonets, 
cannon, to murder not only the Germans but also your dear¬ 
est, best, who are in Russia and are fighting for freedom . . . . 

Workers, our reply to the barbaric intervention has to be 
a general strike. 

Do not let the government scare you with their wild pun¬ 
ishment in prisons, hanging and shooting. We must not and 
will not betray the splendid fighters of Russia. Workers, up 
to fight. 

Know, you lovers of freedom, that in order to save the 
Russian revolution we must keep the armies of the allied 
countries busy at home. 

We, the toilers of America, who believe in real liberty, 
shall pledge ourselves, in case the LTnited States will partici¬ 
pate in that bloody conspiracy against Russia, to create so 
great a disturbance that the autocrats of America' shall be 
compelled to keep their armies at home, and not be able to 
spare any for Russia” 


— 79 


For the majority Mr. Justice Clarke declared that “while the imme¬ 
diate occasion for this particular outbreak of lawlessness, on the 
part of the defendant alien anarchists, may have been resentment 
caused by our government sending troops into Russia as a strategic 
operation against the Germans on the eastern battle front, yet the 
plain purpose of their propaganda was to excite, at the supreme 
crisis of the war, disaffection, sedition, riots, and, as they hoped, 
revolution in this country for the purpose of embarrasing and if 
possible defeating the military plans of the government in Europe.” 
He had earlier laid down that “it will not do to say . . . that the 
only intent of these defendants was to prevent injury to the Rus¬ 
sian cause,” for “men must be held to have intended, and to be 
accountable for, the effects which their acts were likely to produce.” 

The dissenting opinion of Mr. Justice Holmes is difficult to deal 
with from the standpoint of constitutional law, as it does not make 
clear how much it is based on the Constitution. The learned Justice 
conceded that defendants urged curtailment in the production of 
things necessary to the prosecution of the war, and that one of the 
leaflets if published for this purpose might be punishable. He rec¬ 
ognized also that “intent” is at common law satisfied by knowledge 
of facts from which common experience shows that the consequences 
would follow. He adheres to his previously expressed conviction 
that “the United States constitutionally may punish speech that pro¬ 
duces or is intended to produce a clear and imminent danger that 
it will bring about forthwith certain substantive evils that the United 
States constitutionally may seek to prevent.” This recognizes that 
speech which produces such danger is punishable even though the 
danger is not intended in the strict sense of the word. But Mr. 
Justice Holmes finds the danger lacking in the present case, for he 
says: 

“Now nobody can suppose that the surreptitious publish¬ 
ing of a silly leaflet by an unknown man, without more, would 
present any immediate danger that its opinions would hinder 
the success of the government arms or have any appreciable 
tendency to do so.” 

This seems to be the nub of the dissent so far as it goes on consti¬ 
tutional grounds. The majority allow the jury to infer sufficient 
danger from the circumstances. The minority think the inference 


— 8o — 


unjustified because of the silliness of the leaflet and the unimpor¬ 
tance of its authors. To them the circumstances do not as a mere 
matter of inference show that degree of danger which is necessary 
before freedom of speech can be curtailed consistently with the 
First Amendment. The opinion at this point is plainly concerned 
with the constitutional issue, for it follows the introduction: 

“The power undoubtedly is greater in time of war than 
in time of peace, because war opens dangers that do not 
exist at other times. 

But as against dangers peculiar to war, as against others, 
the principle of the right of free speech is always the same. 
It is only the present danger of immediate evil or an intent 
to bring it about that warrants Congress in setting a limit 
to the expression of opinion where private rights are not con¬ 
cerned. Congress certainly cannot forbid all effort to change 
the mind of the country.” 

On the question of the interpretation of the statute the dissenting 
opinion takes the position that “encouraging resistance” is not satis¬ 
fied by encouraging abstinence from assistance, and that “intent” 
must be construed in the strict and accurate sense and not as vaguely 
used in ordinary legal discussion. The inference from the opinion 
is that the First Amendment requires either intent in the sense of 
aim, motive, or object, or else a clearer, nearer danger from the 
words used than could be thought by a reasonable man to be present 
in the principal case. There is also the suggestion that the First 
Amendment limits the degree of punishment for speech concededly 
punishable, though it may be that Mr. Justice Holmes has the due- 
process clause of the Fifth Amendment in mind when he says: 

“In this case sentences of twenty years’ imprisonment 
have been imposed for the publishing of two leaflets that I 
believe the defendants had as much right to publish as the 
Government has to publish the Constitution of the United 
States now vainly invoked by them. Even if I am technically 
wrong and enough can be squeezed from these poor and puny 
anonymities to turn the color of legal litmus paper; I will 
add, even if what I think the necessary intent were shown; 
the most nominal punishment seems to me all that could pos- 


— 8i — 


sibly be inflicted, unless the defendants are to be made to 
suffer not for what the indictment alleges but for the creed 
that they avow—a creed that I believe to be the creed of 
ignoranqe and immaturity when honestly held, as I see no 
reason to doubt that it was held here, but which, although 
made the subject of examination at the trial, no one has a 
right even to consider in dealing with charges before this 
Court." 

The concluding clause may refer to Mr. Justice Clarke’s remark 
on “this particular outbreak of lawlessness, on the part of the 
defendant alien anarchists." That the difference of opinion among 
the judges goes back to a difference in fundamental faiths as to 
what is most important in the process of government is evident 
from the concluding paragraph of the dissenting opinion. Mr. Jus¬ 
tice Holmes reveals not a little of what constitutional interpretation 
owes to the fundamental faiths of the judges when he says: 

“Persecution for the expression of opinions seems to me 
perfectly logical. If you have no doubt of your premises or 
your power and want a certain result with all your heart, 
you naturally express your wishes in law and sweep away 
all opposition. To allow opposition by speeeh seems to indi¬ 
cate that you think the speech impotent, as when a man says 
that he has squared the circle, or that you do not care whole¬ 
heartedly for the result, or that you doubt either your power 
or your premises. Rut when men have realized that time 
has upset many fighting faiths, they may come to believe 
even more than they believe the very foundations of their 
own conduct that the ultimate good desired is better reached 
by free trade in ideas—that the best test of truth is the power 
of the thought to get itself accepted in the competition of 
the market, and that truth is the only ground upon which 
their wishes safely can be carried out. That at any rate is 
the theory of our Constitution. It is an experiment, as all 
life is an experiment. Every year, if not every day, we 
have to wager our salvation upon some prophecy based upon 
imperfect knowledge. While that experiment is part of our 
system, I think that we should be eternally vigilant against 


-82- 


attempts to check the expression of opinions that we loathe 
and believe to be fraught with death, unless they so immi¬ 
nently threaten immediate interference with the lawful and 
pressing purposes of the law that an immediate check is 
required to save the country. I wholly disagree with the 
argument of the Government that the First Amendment left 
the common law as to seditious libel in force. History seems 
to me against the notion. I had conceived that the United 
States through many years had shown its repentance for the 
Sedition Act of 1798 (Act July 14, 1798, c. 73, 1 Stat. 596) 
by repaying fines that it imposed. Only the emergency that 
makes it immediately dangerous to leave the correction of 
evil counsels to time warrants making any exception to the 
sweeping command, 'Congress shall make no law abridging the 
freedom of speech.’ Of course, I am speaking only of expres¬ 
sions of opinion and exhortations, which were all that were 
uttered here, but I regret that I cannot put into more impres¬ 
sive words my belief that in their conviction upon this indict¬ 
ment the defendants were deprived of their rights under the 
Constitution of the United States.” 

Mr. Justice Brandeis, who joined in this dissent, wrote the dis¬ 
senting opinion in Pierce v. United States ,} 9 in which Mr. Justice 
Holmes was again of the minority. This opinion is largely con¬ 
cerned with maintaining that the pamphlet distributed by the defend¬ 
ants did not contain false statements within the meaning of the 
statute. In insisting that the question of the truth or falsity should 
not have been left to the jury, Mr. Justice Brandeis observed: 

“To hold that a jury may make punishable statements of 
conclusions or of opinion, like those here involved, by declar¬ 
ing them to be statements of facts and to be false would 
practically deny members of small political parties freedom 
of discussion in times when feelings run high and the ques¬ 
tions involved are deemed fundamental.” 

On the constitutional issue, the dissenting opinion relied on the 
conviction that the nature of the leaflet and the circumstances of 


19 251 U. S. 205, 40 Sup. Ct. 239 (1920). 



- 83 - 


its distribution were not such as to create any clear and present 
danger of harmful results. It refers to the note of despair in the 
offending tract, with its recognition of the hopelessness of protest 
under the existing system and the irresistible military might of the 
government, and says that “it is not conceivable that any man of 
ordinary intelligence and normal judgment would be induced” 
thereby to commit offense and run the risk of the penalties. Mr. 
Justice Brandeis closes by saying: 

“The fundamental right of free men to strive for better 
conditions through new legislation and new institutions will 
not be preserved if efforts to secure it by argument to fellow 
citizens may be construed as criminal incitement to disobey 
the existing law—merely because the argument presented 
seems to those exercising judicial power to be unfair in its 
portrayal of existing evils, mistaken in its assumptions, 
unsound in reasoning and intemperate in language. No 
objections more serious than these can, in my opinion, rea¬ 
sonably be made to the arguments presented in 'The Price 
We Pay/ ” 

Here, as in the Abrams case, the majority took the position that 
whether the printed words would in fact produce as a proximate 
result the substantive evils which concededly Congress may strive 
to prevent “is a question for the jury to decide in view of all the 
circumstances of the time and considering the place and manner 
of distribution.” Intent under the statute and under the Consti¬ 
tution is something that the jury may infer from probable conse¬ 
quences. The words that can be punished are those that have a 
sufficiently dangerous tendency. 

This is reiterated by Mr. Justice McKenna in the majority opinion 
in Schaefer v. United States , 20 in which the defendants were con¬ 
victed of publishing false statements with the intent of promoting 
the success of the enemies of the United States. The gist of the 
offending articles was that the motives of Great Britain in entering 
the war were not so disinterested as they might have been, and that 
the United States was bluffing and would never send an effective 


30 251 U. S. 466, 40 Sup. Ct. 259 (1920). See 29 Yai.i$ L. J. 677. 



- 8 4 


army to the front. Mr. Justice Brandeis in dissenting insisted that 
“men, judging in calmness . . . could not reasonably have said that 
this coarse and heavy humor immediately threatened the success 
of recruiting.” But Mr. Justice McKenna answered: 

“Coarse, indeed, this was, and vulgar to us; but it was 
expected to produce, and it may be did produce, a different 
effect upon its readers. To them its derisive contempt may 
have been truly descriptive of American feebleness and 
inability to combat Germany’s prowess, and thereby chill 
and check the ardency of patriotism and make it despair of 
success, and in hopelessness relax energy both in preparation 
and action. If it and the other articles . . . had not that 
purpose, what purpose had they ? Were they the mere expres¬ 
sion of peevish discontent, aimless, vapid, and innocuous? 
We cannot so conclude. We must take them at their word, 
as the jury did, and ascribe to them a more active and sinister 
purpose. They were the publications of a newspaper, delib¬ 
erately prepared, systematic, always of the same trend, more 
specific in some instances, it may be, than in others. Their 
effect, or the persons affected, could not be shown, nor was 
it necessary. The tendency of the articles and their efficacy 
were enough for the offense—their ‘intent’ and ‘attempt,’ 
for those are the words of the act—and to have required 
more would have made the law useless. It was passed in 
precaution. The incidence of its violation might not be imme¬ 
diately seen, evil appearing only in disaster, the result of the 
disloyalty engendered and the spirit of mutiny.” 

Mr. Justice Holmes joined in the dissent of Mr. Justice Brandeis; 
and Mr. Justice Clarke this time opposed the majority, but not on 
constitutional grounds. The disagreement between the judges on 
the constitutional issue comes down to a question of degree as to 
the extent to which the court will allow the jury to surmise as to 
the probable effect of the objectionable language. In all the cases 
which have come before the Supreme Court the defendants were 
preaching a gospel which, if acted upon, would be a drag on the 
prosecution of the war. It seems safe to sum up the constitutional 
law made by the decisions by saying that the First Amendment 


85 - 


confers no immunity on such preaching even when confined to insin¬ 
uation and innuendo. Yet it would be easy to think of much advo¬ 
cacy which would in fact hamper the conduct of the war much 
more grievously than any words of those now serving sentence, but 
which would never be thought punishable if coming from those 
whose heart is in the popular place. It might be that in dealing 
with prosecutions under such circumstances Mr. Justice Holmes 
would find more agreement with his emphasis on the stricter mean¬ 
ing of “intent.” He suggests hypothetical cases where patriots, 
thinking that we were wasting money on aeroplanes or making 
more cannon of a certain kind than necessary, successfully advo¬ 
cated a curtailment of production which turned out to hinder the 
prosecution of the war. 21 

Two more espionage cases may be disposed of briefly. In O'Con¬ 
nell v. United States 22 the court was unanimous in sustaining the 
Espionage Law and the Selective Service Law on the authority of 
cases decided since the writ of error was sued out. The latter act 
was held to cover obstruction by non-official as well as official per¬ 
sons. No question of freedom of speech was involved. Stilson v. 
United States* 3 did not review the evidence in any detail and adds 
nothing to the cases already considered. On one of the counts 
the government did not press the conviction; Justice Holmes and 
Justice Brandeis thought that as the sentence was upon a general 
verdict of guilty on both counts, the judgment should be reversed, 
but none of their colleagues agreed. The case also held that the 
trial by an impartial jury guaranteed by the Sixth Amendment does 
not include the privilege of peremptory challenges and that there¬ 
fore defendants tried jointly cannot complain that the peremptory 
challenges are no more numerous than when one is tried alone. 


21 For general articles on freedom of speech, see Thomas F. Carroll, 
“Freedom of Speech and the Press in the Federalist Period’”, 18 Mich. L. 
Rev. 615, Robert Ferrari, “Political Crime”, 20 Coeum. L. Rev. 308, Fred B. 
Hart, “Power of Government over Speech and Press”, 29 YalE L. J. 4 i0 > 
and Theodore Schroeder, “Political Crimes Defined”, 18 Mich. L. Rev. 30. 
Notes on various aspects of espionage and similar laws appear in 20 Coeum. 
L. Rev. 222, 483, 700, 18 Mich. L. Rev. 167, 798, and 6 Va. L. Rev. 53. 

”253 U. S. 142, 40 Sup. Ct. 444 (1920). 

“250 U. S. 583, 40 Sup. Ct. 28 (1919)- See 29 YaeE L. J. 363 for com¬ 
ment on the question of challenge involved in the case. 



- 86 - 


In Stroud v. United States 24 there were contentions of double 
jeopardy and self-incrimination. Mr. Stroud had been convicted 
of murder, with a recommendation by the jury against capital pun¬ 
ishment, which under the statute was binding. He asked for a new 
trial and got it, and this time was convicted of murder, with no 
recommendation by the jury as to sentence. Under the statute he 
was sentenced to death. The court found that the first conviction 
as well as the second was of murder in the first degree and applied 
the established rule that, since the defendant himself invoked the 
action of the court which resulted in a second trial, he was not 
thereby placed in second jeopardy within the meaning of the Con¬ 
stitution. 25 Allegations that the jury which brought in the second 
verdict was not an impartial one, as guaranteed by the Sixth Amend¬ 
ment, were based on the facts that some of the prospective jurors 
were present at preliminary proceedings at which statements preju¬ 
dicial to the defendant were made and that the trial court refused 
to transfer the case to another division of the district. Jurors from 
the immediate vicinity were, however, excluded from the panel, and 
Mr. Justice Day said that “matters of this sort are addressed to the 
discretion of the trial judge, and we see nothing in the record to 
amount to abuse of discretion such as would authorize an appellate 
court to interfere with the judgment.” The complaint of self¬ 
incrimination was founded on the refusal of the trial court to grant 
an application for a return to the defendant of letters written by 
him in prison and turned over by the warden to the district attor¬ 
ney. The court answered that the letters were voluntarily written, 
that no threat or coercion was used to obtain them, nor were they 
seized without process, and that having come into the possession of 
the prison officials “under established practice, reasonably designed 
to promote the discipline of the institution * * * there was neither 
testimony required of the accused, nor unreasonable search and 
seizure in violation of his constitutional rights.” 


34 251 U. S. 15, 40 Sup. Ct. 50 (1919)- See 5 Va. L. Reg. n. j. 882, and 
6 Va. L. Rev. 457. For a rehearing on the question of challenge under the 
statute, see Stroud v. United States, 251 U. S. 380, 40 Sup. Ct. 176 (1920). 

“For discussions of double jeopardy, see 68 U. Pa. L. Rev. 70, on dormer 
conviction for robbery as a bar to prosecution for murder, and 6 Va. L. Rev. 
372, on the same act as an offense against the state and a municipality. 



8 7 - 


A different result was reached in Silverthorne Lumber Co. v. 
United States . 26 Governmental officials raided the offices of a cor¬ 
poration after arresting its officers, took away papers without any 
search warrant, photographed them, retained photographs and 
copies after returning the originals by order of the court upon appli¬ 
cation by the defendants, framed a new indictment on the basis of 
the knowledge thus gained, and then obtained a subpoena to pro¬ 
duce the originals. For refusing to obey the subpoena the corpora¬ 
tion and one of its officers were found guilty of contempt. The 
Supreme Court held the subpoena unlawful as a violation of the 
constitutional prohibition against unreasonable searches and seizures. 
As Mr. Justice Holmes puts it: 

“The proposition could not be presented more nakedly. 
It is that, although of course its seizure was an outrage 
which the Government now regrets, it may study the papers 
before it returns them, copy them, and may then use the 
knowledge that it has gained to call upon the owners in 
more regular form to produce them; that the protection of 
the Constitution covers the physical possession but not any 
advantages that the Government can gain over the object of 
its pursuit by doing the forbidden act.” 

It had already been held that papers so seized could not, after proper 
objection, be laid directly before the grand jury. The idea that this 
means only that two steps are required instead of one was said to 
reduce the Fourth Amendment to a form of words. Mr. Justice 
Holmes then continues: 

“The essence of a provision forbidding the acquisition of 
evidence in a certain way is that not merely evidence so 
acquired shall not be used before the court, but that it shall 
not be used at all. Of course, this does not mean that the facts 
thus obtained become sacred and inaccessible. If knowledge 
of them is gained from an independent source they may be 
proved like any others, but the knowledge gained by the 


*•252 U. S. 385, 40 Sup. Ct. 182 (1920). See 8 Calif. L. Rev. 347, 20 
Coe. L. Rev. 484, 33 Harv. L. Rev. 869, 4 Minn. L. Rev. 447, 6 Va. L. Reg. 
n. s. 223, and 29 Yale L. J. 553 * 



88 — 


Government’s own wrong cannot be used by it in the way 
proposed.” 

The protection of the decision was accorded to the corporation as 
well as to the aggrieved individual. While corporations are not 
privileged to refuse to produce self-incriminating books and papers, 
as individuals are, under a judicial blending of the search-and- 
seizure and self-incrimination clauses of the Fourth and Fifth 
Amendments, “the rights of a corporation against unlawful search 
and seizure are to be protected even if the same result might have 
been achieved in another way.” The case is rested on the Fourth 
Amendment without any admixture of the Fifth with its privilege 
against self-incrimination. Chief Justice White and Mr. Justice 
Pitney dissented, but without opinion. 27 

The clause of the Sixth Amendment entitling persons accused of 
crime against the federal government to trial “by an impartial jury 
of the state and district wherein the crime shall have been committed” 
is involved in Gayon v. McCarthy , 28 though the issue does not 
appear to have been raised by the accused. Gayon while in New 
York conspired with persons in Texas, and the acts of his fellow 
conspirators in Texas were declared to establish the jurisdiction of 
the federal district court in Texas to indict Gayon. 29 This case and 
another 30 passed on procedural questions relating to removal of the 
accused from one federal district to another. A third case 31 
involved similar questions of procedure in arrest for extradition 
to a foreign country. 32 


27 For discussions of self-incrimination, see A. M. Kidd, “The Right to 
Take Finger-prints, Measurements and Photographs”, 8 Caeif. L. Rev. 25, 
D. O. McGovney, “Self-Criminating and Self-Disgracing Testimony”, 5 Iowa 
L. Buee. 175 , Roy Cleasey Merrick, “The Privilege Against Self-Incrimina¬ 
tion as to Charges of Contempt”, 14 Iel. L. Rev. 171, a note in 8 Caeif. L. 
Rev. 241 on powers exercised' under the federal Trade Commission Act, and 
a note in 14 Iee. L. Rev. 644 on self-incrimination under the National Prohi¬ 
bition Act. 

“252 U. S. 171, 40 Sup. Ct. 244 (1920). 

29 For question of venue for trial when blow is in one county and death 
in another, see 20 Coeum. L. Rfv. 619, and 33 Harv. L. Rev. 843, 863. 

30 Stallings v. Splain, 253 U. S. 339, 40 Sup. Ct. 537 (1920). 

31 Collins v. Miller, 252 U. S. 364, 40 Sup. Ct. 347 (1920). 

32 Caldwell v. Parker, 252 U. S. 376, 40 Sup. Ct. 388 (1920), held that a 



— 89 — 

VIII. Jurisdiction and Procedure oe Courts 
i. The Extent of Federal Judicial Pozver 

An attempt by a citizen of New Jersey to sue that state in an 
original proceeding in the Supreme Court of the United States was 
readily frustrated in Duhne v. New Jersey™ The bill was brought 
to enjoin the enforcement of the Eighteenth Amendment. The only 
possible ground for starting such a proceeding in the Supreme 
Court was that the suit was one in which a state is a party. P>ut 
the court pointed out through the Chief Justice that the third sec¬ 
tion of Article III, which describes the original jurisdiction of the 
Supreme Court, “relates solely to the grounds of federal jurisdic¬ 
tion” conferred in the preceding section, “and hence solely deals 
with cases in which the original jurisdiction of this court may be 
resorted to in the exercise of the judicial power as previously 
given.” Since it is well settled that the federal judicial power does 
not embrace a suit brought by a citizen against a state without its 
consent, the contention of the plaintiff was said to come “to the 
proposition that the clause relied upon provides for the exercise by 
this court of original jurisdiction in a case where no federal judicial 
power is conferred.” Permission to file the bill was therefore refused. 
Whether the action was one against the federal government, in so 
far as it sought to enjoin federal officers, was not considered, inas¬ 
much as the action against those officers had no claim to be brought 
originally in the Supreme Court, and the effort necessarily fell flat 


soldier in the army charged with the murder of a civilian is within the juris¬ 
diction of state courts even in time of war, since the Articles of War do not 
clearly make the jurisdiction of courts martial exclusive. 

For discussions of the Court-martial system, see S. T. Ansell, “Military 
Justice”, 5 Cor NEW/ L. Q. i, George Gleason Bogert, “Courts-Martial: Criti¬ 
cisms and Proposed Reform”, 5 CornEU, L. Q. 18, and Edmund M. Morgan, 
“Court-Martial Jurisdiction over Non-Military Persons Under the Articles of 
War”, 4 Minn. L. Rev. 79, and 1 “The Existing Court-Martial System and the 
Ansell Army Articles”, 29 Yale L. J. 52 - 

See 18 Mich. L. Rev. 810 for discussion of question whether a criminal 
statute is void for indefiniteness; 33 Harv. L. Rev. 449, 473 , for differing 
penalties for men and women under equal protection of the laws; and 6 Va. 
L. Rev. for imprisonment for non-payment of alimony. 

33 251 U. S. 311, 40 Sup. Ct. 154 (1920). See 5 Va. E. Reg. n. s. 881, and 
29 Yale L. J. 471. 



— 9 ° — 


when it was determined that the plaintiff could not hale the state 
before that court. 34 

An effort by the Secretary of the Treasury to resist proceedings 
brought against him in the Supreme Court of the District of 
Columbia, on the ground that the suit was one against the United 
States, met with defeat in Houston v. Ormes, 35 The proceeding 
was one by an attorney to establish an equitable lien for her fees in 
a fund in the treasury of the United States appropriated to pay a 
claim found by the Court of Claims to be due her client. The client 
had been made a party and had appeared and unsuccessfully 
defended. This was held to get rid of the objection that debts due 
from the United States have no situs at the seat of government and 
that therefore the decree against the secretary in favor of the attor¬ 
ney could not protect the government from subsequent suit by the 
client. The federal statute forbidding the assignment of claims 
against the government was put to one side as not standing in the 
way of assignment by operation of law after the claim has been 
allowed. This left only the question whether the suit to establish 
a lien on the fund was a suit against the United States. As to this, 
Mr. Justice Pitney said: 

“But since the fund in question has been appropriated by 
act of Congress for payment to a specified person in satis¬ 
faction of a finding of the Court of Claims, it is clear that 
the officials of the Treasury are charged with the ministerial 
duty to make payment on demand to the person designated. 
It is settled that in such a case a suit brought by the person 
entitled to the performance of the duty against the official 
charged with its performance is not a suit against the gov¬ 
ernment.” 36 

The extent of the admiralty jurisdiction was involved in two 
cases already dealt with. In Peters v. Veasey, 37 a longshoreman 

84 See 4 Minn L. Rev. 364 for a discussion of a provision in the Virginia 
constitution held to be self-executing and to give the right to sue the state 
and its subdivisions without further legislative action. 

”252 U. S. 469, 40 Sup. Ct. 369 (1920). 

38 For consideration of other instances in which suit was resisted as one 
against the United States, see 8 Calie. L. Rev. 342, 20 Coeum. L. Rev. 217, 5 
Cornell L. Q. 203, and 33 Harv. L. Rev. 322. 

37 251 U. S. 121, 40 Sup. Ct. 65 (1919). 



— 9i — 


injured on a ship by falling through a hatchway, and in Knicker¬ 
bocker Ice Co. v. Stewart,™ a bargeman injured when doing unnamed 
work said to be of a maritime nature, were held not entitled to the 
remedies of state compensation laws. There appeared to be no 
dispute in either case that the injury was within the admiralty juris¬ 
diction. The decision that Congress could not permit the applica¬ 
tion of state compensation laws has already been reviewed. 39 

The question whether a case is within the federal jurisdiction 
because one arising under the Constitution of the United States 
necessarily involves an interpretation of the clause of the Consti¬ 
tution relied on by the party who seeks to get into the federal courts. 
The Supreme Court has develepod the practice of saying that it 
has no jurisdiction to answer frivolous questions or questions already 
completely disposed of. So it turns down preposterous objections 
by dismissing them for want of jurisdiction. There is, of course, 
only a formal difference between such procedure and the alternative 
one of entertaining jurisdiction and holding the objection one worth 
making but nevertheless ill-founded. Cases in which substantive 
federal questions have actually been disposed of have been treated 
together in this review, whether or not objection was raised to the 
exercise of jurisdiction. 

The question whether the suit arose under a law of the United 
States was the issue in Pell v. McCabe .* 0 This was a bill brought 
in the district court to enjoin a suit for fraud against the petitioner 
who in previous bankruptcy proceedings brought primarily against 
others had been determined not to be a general partner and there¬ 
fore not subject to having his assets administered in the bankruptcy 
proceedings. The later suit against him for fraud was held to be 
quite independent of anything adjudicated in the bankruptcy pro¬ 
ceedings and therefore one properly within the jurisdiction of the 
state court and not to be enjoined by the federal court by reason of 
its jurisdiction over bankruptcy matters. In First National Bank 
v. Williams ,* 1 however, a suit by a national bank against the comp¬ 
troller of the currency to enjoin alleged harassing actions on his 


“253 U. S. 14a 40 Sup. Ct. 438 (1920). 
" 19 Mich. L. Rev. 13-14. 

"250 U. S. 5 73 , 40 Sup. Ct. 43 (1919). 
“252 U. S. 504, 40 Sup. Ct. 372 (1920). 



— 92 — 


part was held to be one in which the right to recover turns on the 
construction and application of the National Banking Act, and 
therefore one arising under that act, even though not expressly 
authorized by it to be brought. It followed from this that under 
another statute the comptroller might be sued in the district where 
the bank is located. 

In such cases as the foregoing it is often difficult to tell whether 
the issue is constitutional or merely one of statutory construction. 
When jurisdiction is entertained, the case is of course within the 
federal judicial power. But jurisdiction may be denied solely for 
want of statutory warrant for entertaining it. Sometimes the stat¬ 
utory limits are coterminous with the constitutional limits and 
sometimes not. Clearly questions whether the judgment below is 
a final one , 42 whether the federal issue is raised in season , 43 whether 


"Ex parte Tiffany, 252 U. S. 32, 40 Sup. Ct. 239 (1920), held final an 
order of the district court denying an application to require a receiver to 
turn over property to a receiver appointed by a state court. United States v. 
Thompson, 251 U. S. 407, 40 Sup Ct. 289 (1920), held a ruling sustaining a 
motion to quash an indictment to be a “decision or judgment sustaining a 
special plea in bar” so as to authorize the government to take a direct writ 
of error from the district court to the Supreme Court under the Criminal 
Appeals Act. The case held also that the Pennsylvania rule that a grand jury 
may not, without leave of court, bring in a new bill on matters previously sub¬ 
mitted to another grand jury, is not the common law, as rightly perceived, 
and therefore not the rule for federal courts. The federal rule is not statu¬ 
tory, but is the product of the federal court’s superior conception of the 
common law. The Pennsylvania rule is not adopted as the rule for federal 
courts by section 722 of the Revised Statutes, for that applies only in the 
absence of a federal rule on the subject. Collins v. Miller, 252 U. S. 364, 40 
Sup. Ct. 347 (1920), held a decision of the district court not final because it 
disposed finally of only a part of the case. The Supreme Court raised of its 
own motion the question of the lack of finality. It remarked obiter that the 
construction of a treaty by the district court in a final decision is subject to 
direct review by the Supreme Court, Oneida Navigation Corporation v. W. 
&. S. Job & Co., 252 U. S. 521, 40 Sup. Ct. 357 (1920) held not final the dis¬ 
missal by the district court of a petition to bring in another defendant alleged 
to be liable for a collision. Here again the Supreme Court raised the ques¬ 
tion of finality of its own motion. See 33 Harv. L. Rev. 1076 for a note on 
finality of decision for purposes of appeal. 

48 Godchaux Co. v. Estinople, 251 U. S. 179 , 40 Sup. Ct. 116 (1920) held 
it too late to raise a federal question for the first time on a petition for a re¬ 
hearing in the state supreme court, where that court does not actually enter- 



the suit involves the requisite amount to be brought in the federal 
courts , 44 and whether the complaint goes to the validity of some 
authority exercised or only to some other right, title or interest 
under the federal Constitution or laws , 45 are questions solely of 
statutory construction. No constitutional issue seems to be involved 
in decisions dismissing a bill because the question raised has become 


tain the petition and pass on the objection. Mergenthaler Linotype Co. v. 
Davis, 251 U. S. 256, 40 Sup. Ct. 133 (1920), affirms the same point, and also 
decides that the state decision was final. Hiawassee River Power Co. v. 
Carolina-Tennessee Power Co., 252 U. S. 34L 40 Sup. Ct. 331 (1920), holds 
the federal question presented too late when first raised on petition for writ 
of error filed in the federal Supreme Court. Objection was seasonably raised 
to introducing in evidence a charter, but its reception in evidence was held to 
violate no federal right. 

44 Chesbrough v. Northern Trust Co., 252 U. S. 83, 40 Sup. Ct. 237 (1920), 
refused to order the district court to dismiss for want of jurisdiction an 
action for tort in which the alleged damages exceeded the prescribed amount 
and there was nothing to show that such a recovery was impossible or that 
there was bad faith. Scott v. Frazier, 253 U. S. 243, 40 Sup .Ct, 503 (1920), 
ordered a bill dismissed for want of allegation that the amount in controversy 
equals that required by the statute. See 33 Harv. L. Rev. 477 for a note on 
good faith in alleging the amount in controversy. 

48 Mergenthaler Linotype Co. v. Davis, 251 U. S. 256, 40 Sup. Ct. 133 
(1920), note 43, supra, held 1 that the claim that a lease contract was an inter- 
state-commerce contract and therefore not subject to state statutes does not 
challenge the validity of the statute so as to justify a writ of error from the 
state court, but at most asserts a right, title, or interest under the federal 
Constitution which might be the basis for a writ of certiorari. Jett Bros. Co. 
v. City of Carrollton, 252 U. S. 1, 40 Sup. Ct. 255 (1920), held that a com¬ 
plaint that petitioner’s property was assessed at full value while other 
property was assessed at thirty or forty per cent of its value does not ques¬ 
tion the validity of a statute or an authority exercised under it as against the 
Constitution of the United States so as to warrant a writ of error. Mr. 
Justice Day says that “the mere objection to an exercise of authority under a 
statute whose validity is not attacked cannot be made the basis of a writ of 
error to this court.” This case repeats that it is too late to raise the federal 
question on petition for a rehearing in the state court when that court does 
not give it consideration. For an extensive note on the considerations deter¬ 
mining whether writ of error or certiorari is the proper device to bring a 
case from the state court to the United States Supreme Court, see 33 Harv. 
L. Rev. 102. The cases outlined in the present note and in the two preceding 
do not exhaust the list of those in which the Supreme Court considered 
similar issues during the past term, but are given merely to illustrate the 
blunders that occur in matters of practice. 



moot by the amendment of a statute , 40 or allowing an alien enemy 
to proceed as party plaintiff where adequate precautions are taken 
against paying a judgment to him personally , 47 or holding that a 
soldier in the army charged with the murder of a civilian is within 
the jurisdiction of a state court even in time of war, since the Arti¬ 
cles of War do not clearly make the jurisdiction of the courts mar¬ 
tial exclusive . 48 The reports of the decisions of each term are 
crowded with disputes on questions of federal practice. The igno¬ 
rance and/or the perversity of attorneys impose on the Supreme 
Court an excess of unnecessary burden. The burden appears not 
only in the cases in which opinions are written but still more in the 
many instances in which decisions are disposed of in a memoran¬ 
dum. Cases of this latter character are not included in this review. 
Needless to say, they frequently represent the determination of a 
constitutional question. If the question is not regarded by the 
Supreme Court as one worth discussing, the reviewer may perhaps 
be pardoned for emulating its example . 49 


44 United States v. Alaska S. S. Co., 253 U. S. 113, 40 Sup. Ct 448 (1920). 

4T Birge-Forbes Co. v. Heye, 251 U. S. 317, 40 Sup. Ct. 160 (1920). 

48 Caldwell v. Parker, 252 U. S. 376, 40 Sup. Ct. 388 (1920). 

49 For other discussions of the jurisdiction of the federal courts see 
Armistead M. Dobie, “Jurisdiction of the United States District Court as 
Affected by Assignment”, 6 Va. L. Rev. 553, and notes in 33 Harv. L. Rev. 
970, 985, and 6 Va. L. Rev. 124. 

Discussions of various aspects of the judicial interpretation of constitu¬ 
tional limitations will be found in George J. Danforth, “The Influence of the 
Lawyer upon the Trend of Modern Legislation”, 89 Cent. L. J. 392, W. F. 
Dodd, “The Problem of State Constitutional Construction”, 20 Coeum. L. 
Rev. 635, “Implied Powers and Implied Limitations in Constitutional Law”, 
29 Yale L. J. 137. W. L. Jenks, “Judicial System of Michigan Under the 
Governor and Judges”, 18 Mich. L. Rev. 16; Shippen Lewis, “Revising the 
Constitution of Pennsylvania”, 68 U. Pa. L. Rev. 120, Fred A. Maynard, 
“Five to Four Decisions of the Supreme Court of the United States”, 89 
Cent. L. J. 206, William Renwick Riddell, “The Constitutions of the United 
States and Canada”, 4 Minn. L. Rev. 165, and G. Sweetman Smith, “Judicial 
Encroachment upon the Legislative Prerogative”, 3 Bi. Mon. L. Rev. i. 

The practice of foreign countries in respect to declaring laws unconsti¬ 
tutional is considered in 8 CaliE. L. Rev. 91. In 5 Cornell L. Q. is a note on 
the right of a legislature to validate an act previously declared invalid by 
the courts. The duty of federal courts to follow the law of the state in cases 
where jurisdiction is obtained' by diversity of citizenship is treated in 20 



— 95 — 

2. Requisites of Jurisdiction over Defendants 

The question in Chipman v. Thomas B. Jeffrey Co . 60 was whether 
a Wisconsin corporation formerly doing business in New York, 
which had complied with the New York statute and designated a 
New York agent on whom process against it might be served, is 
subject to suit in New York on an extra-New-York cause of action 
after it has ceased to do business in New York but before it has 
revoked the designation of its New York agent. The case was 
started in the New York court and removed to the federal district 
court on motion of the defendant. In that court a motion was made 
to have the service set aside for lack of jurisdiction over the so-called 
person of the defendant. The district judge granted the motion 
and his action was affirmed by the Supreme Court. But the reason 
given was that the New York courts had said that “unless a foreign 
corporation is engaged in business within the state, it is not brought 
within the state by the presence of its agents.” Of course the 
validity of the service depended primarily upon the statute. If the 
statute did not authorize service in the case in question there was 
no constitutional issue. The Supreme Court, however, was careful 
to guard against any inference that it would have approved of such 
an exercise of jurisdiction had it been found warranted by the stat¬ 
ute. For Mr. Justice McKenna says that “in resting the case on 
the New York decisions we do not wish to be understood that the 
validity of such service as here involved would not be of federal 
cognizance.” Perhaps a hint of what the Supreme Court thinks 
about the constitutional issue may be gathered from the comment 
that the state court in sustaining service in a case in which the cor¬ 
poration was doing business within the state showed a conscious 
solicitude of the necessity of making that the ground of its decision. 5 * 


Colum. L. Rev. 612. The requirement that state courts must follow the 
federal rule of burden of proof in cases under the federal Employers’ Lia¬ 
bility Law is discussed in 33 Harv. L. Rev. 861. 

60 251 U. S. 373, 40 Sup. Ct. 172 (1920). See 20 Colum. L. Rev. 618, 33 
Harv. L. Rev. 730, and 29 Yale L. J. 554. 

81 For notes on jurisdiction over foreign corporations, see 20 Coeum. L. 
Rev. 205, 33 Harv. L. Rev. 114, 14 III. L. Rev. 653, and 29 Yale L. J. 567 - 
Jurisdiction for divorce or annulment of marriage is treated in 20 Colum. 
L. Rev. 479, and 5 Cornell L. Q. 174; service of process on a person in the 



— 96 — 

j. Procedural Requirements 

An interesting question touching the inherent powers of federal 
courts and the restriction on those powers by the guarantee of trial 
by jury contained in the Seventh Amendment arose in In re Peter- 
son . 52 Judge A. N. Hand of the district court appointed an auditor 
in an action at law on a contract, instructed him to examine the 
accounts of the parties, gave him power to take testimony and com¬ 
pel the attendance of witnesses, and ordered him to file a report 
with the clerk with a view to simplifying the issues for the jury. 
The auditor was to make no final determination and his report was to 
be merely evidence to submit to the jury, which was to retain the 
power of final determination of all issues of fact in the case. An 
original petition was brought in the Supreme Court for writs of 
mandamus and/or prohibition directed to Judge Hand to restrain 
him from proceeding in this manner and to direct him to restore 
the case to the calendar for trial in the usual way. Leave to file the 
petition was granted; 53 but, after hearing, the petition was denied. 
The Seventh Amendment was held not to forbid changes in practice 
or procedure or new methods of determining what facts are in issue. 
The auditor's task of simplifying the issues was called a function 
in essence the same as that of pleading. The proposed admission 
of his report as evidence was likened to statutory provisions making 
the findings of administrative commissions prima facie evidence. 
As the jury was to be free to deal with this report as with any 
other evidence and the parties were not restricted in the introduc¬ 
tion of other evidence, the constitutional right to trial by jury was 
not impaired. It was recognized that the Seventh Amendment 
would forbid a compulsory reference to the auditor with power to 
determine any of the issues. As for the source of the power exer¬ 
cised by Judge Hand, the Supreme Court found it in the inherent 
powers of courts to take action, not forbidden by statute or Con¬ 
stitution, that will aid them in the performance of their duties. 

state on public duty, in 33 Hakv. L. Rev. 721, 734. See also Emil W. Colombo, 
“Service on Parties Fraudulently Brought Within the Jurisdiction”, 3 Bi. 
Month. L. Rev. 23. 

"253 U. S. 543 , 40 Sup. Ct. 543 (1920). See Thomas W. Shelton, “A 
Useful Procedural Innovation—Auditors in Law Cases”, 91 Cent. L. J. 59. 

“In re Peterson, -U. S.-, 40 Sup. Ct. 178 (1920). 




— 97 — 


This inherent power was said to be the same whether the court sits 
in law or in equity. Owing to provisions in the federal statutes, a 
discretion reserved by the trial judge as to apportioning the costs 
of the enterprise was negatived and it was declared that the expense 
must be borne by the losing party. Mr. Justice Brandeis wrote the 
opinion of the court. Justices McKenna, Pitney and McReynolds 
dissented, without opinion. 

Several cases involved questions of procedure in the state courts. 
Chicago, R. I. & P. R. Co. v. Cole 54 found it proper for a state to 
provide that the defenses of contributory negligence and assump¬ 
tion of risk shall in all cases be a question of fact for the jury, since 
those defenses might be abolished altogether. Mr. Justice Holmes 
declared that a state may do away with the jury altogether, or modify 
its constitution, the procedure before it, or the requirements of a 
verdict, “as it may confer legislative and judicial powers upon a 
commission not known to the common law.” So, he continued, the 
state may confer upon a jury larger powers than those that gener¬ 
ally prevail. The cases cited for a number of these propositions 
were civil actions, but Mr. Justice Holmes does not include this 
qualification in his recital. The actual decision is of course restricted 
to civil actions and is limited by the concluding statement that “in 
the present instance the plaintiff in error cannot complain that its 
chance to prevail upon a certain ground is diminished when the 
ground might have been altogether removed.” It seemed to be con¬ 
ceded that the plaintiff’s intestate had been guilty of what was con¬ 
tributory negligence at common law. 55 

Minor complaints met with short answers in two cases. In Gold¬ 
smith v. Prendergast Construction Co. 5S Mr. Justice Day declared 
brusquely: “We find no merit in the contention that a federal con¬ 
stitutional right was violated because of the refusal to transfer the 
cause from the division of the Supreme Court of Missouri which 
heard it to the court in banc.” In Lee v. Central of Georgia Ry. 

"251 U. S. 54, 40 Sup. Ct. 68 (1919). See 90 Cent. L. J. 167 and 5 Va. 
L. Reg. n. s. 799. 

“ The question whether the acquisition of the privilege of voting entitles 
women to sit on juries is considered in 90 Cent. L. J. 205 and 68 U. Pa. L. 
Rev. 398. In 68 U. Pa. L. Rev. 369 is a note on the right to trial by jury in 
will cases under the Pennsylvania constitution. 

"252 U. S. 12, 40 Sup. Ct. 273 (1920), 19 Mich. L. Rev. 129. 



- 98 - 


Co . 57 a plaintiff suing in the state court under the federal Employ¬ 
ers’ Liability Law complained because the state practice did not 
allow him to sue the company and the negligent engineer jointly 
in a single count. Mr. Justice Brandeis told him that such questions 
are normally matters of pleading and practice relating solely to the 
form of remedy and therefore wholly questions of state law. Only 
when they become matters of substance which affect a federal right, 
as in the case of the burden of proof in actions under the Employ¬ 
ers’ Liability Law , 58 does the state decision become subject to fed¬ 
eral review. 

Such questions as that involved in the preceding case might appro¬ 
priately be classified together under the head of substantive ele¬ 
ments in rights of action, and dealt with under the police power 
rather than in the section on judicial procedure. Such a group of 
cases would embrace also Canadian Northern Ry. Co. v. Bggen , 59 
which sustained a Minnesota statute providing that “when a cause of 
action has arisen outside of this state, and, by the laws of the place 
where it arose, an action thereon is there barred by lapse of time, 
no such action shall be maintained in this state unless the plaintiff 
be a citizen of this state who has owned the cause of action ever 
since it accrued.” A North Dakota citizen injured in Canada was 
barred from suing in Canada by the Canadian statute of limitations. 
He brought his action in Minnesota within the time available for a 
Minnesota citizen. He complained that the Minnesota statute which 
barred him but did not bar citizens of Minnesota violated the pro¬ 
vision in the federal Constitution that “the citizens of each state 
shall be entitled to all privileges and immunities of citizens in the 
several states.” The Circuit Court of Appeals agreed with him. 
But the Supreme Court said that the provision does not guarantee 
citizens of other states absolute equality with citizens of the state 
whose action is questioned, and that the plaintiff had all that he 
deserved if he had as long to sue in Minnesota as in the country 
where he worked and got hurt. For a year he is on an equality with 


57 252 U. S. 109, 40 Sup. Ct. 254 (1920). 

” See Central Vermont Railway Co. v. White, 238 U. S. 507, 35 Sup. Ct. 
865 (1915), and New Orleans & N. E. R. Co. v. Harris, 247 U. S. 367, 38 
Sup. Ct. 535 (1918). 

”252 U. S. 553, 40 Sup. Ct. 402 (1920). 





- 99 - 


citizens of Minnesota; if he does not avail himself of this equality 
when he has it, he cannot complain that it does not continue longer, 
when the restriction as to him is reasonable in itself. It may be 
observed that Mr. Justice Clarke adduces no reasons why a distinc¬ 
tion should be made between citizens of Minnesota and those of her 
sister states, as the court has done in the other cases when a dis¬ 
crimination has been sanctioned. The case, therefore, seems to stand 
for a principle that if citizens of other states have treatment which 
is fair intrinsically, and if they are in no way prejudiced by what is 
allowed to citizens of the state whose favor they are seeking, they 
cannot complain that a state is kinder to its own citizens than to 
others . 60 

4. Faith and Credit to Proceedings of Sister States 

An important question was settled in Kenny v. Supreme Lodge,* 1 
in which Illinois was told that it could not refuse to allow suit in 
its courts on a judgment obtained in a sister state, although the 
original cause of action could not have been sued on in Illinois. The 
Illinois statute provided that no action should be brought in that 
state for damages occasioned by death in another state in conse¬ 
quence of wrongful action. The Illinois court construed this to 
forbid suit in Illinois on an Alabama judgment for an Alabama 
death, and sustained the statute as constitutional. But the Supreme 
Court distinguished the earlier cases allowing a state to refuse suit 
on a foreign judgment obtained by one foreign corporation against 
another 62 and on a judgment for a penalty for violation of the law 
of a sister state , 63 and held the case before it governed by an earlier 
decision that Mississippi was bound to recognize a Missouri judg¬ 
ment on a Mississippi transaction that was void by the law of Miss- 

80 On the power of a state to close its courts to actions for wrongful 
death in other jurisdictions, see 33 Harv. L. Rev. 727; on closing the courts 
to suits between foreign corporations on a foreign cause of action, see 29 
YaeE L. J. 457 - 

“252 U. S. 411, 40 Sup. Ct. 371 (1920). See 29 Yaee L. J. 812. For notes 
on the contrary decision of the state court, see 2 Iee. L. Buee. 361 and 28 
Yaee L. J. 264. 

82 Anglo-American Provision Co. v. Davis Provision Co., 191 U. S. 373 , 
24 Sup. Ct. 92 (1903). 

“Wisconsin v. Pelican Insurance Co., 127 U. S. 265, 8 Sup. Ct. 1370 
(1888). 



— 100 — 


issippi . 64 Mr. Justice Holmes recognized that “there is truth in the 
proposition that the Constitution does not require the state to fur¬ 
nish a court,” but he declared that “it also is true that there are lim¬ 
its to the power of exclusion and to the power to consider the nature 
of the cause of action before the foreign judgment based upon it is 
given effect,” and that “it is plain that a state cannot escape its 
constitutional obligations by the simple device of denying jurisdic¬ 
tion in such cases to courts otherwise competent.” An argument 
that suit was foreclosed in Illinois because Alabama provided that 
the action could be maintained in a court of competent jurisdiction 
within the state “and not elsewhere” was dealt with by saying that 
“when the cause of action is created the invalidity of attempts to 
limit the jurisdiction of other states to enforce it has been estab¬ 
lished by the decisions of this court,” and further that “had these 
decisions been otherwise they would not have imported that a judg¬ 
ment rendered exactly as required by the Alabama statute was not 
to have the respect due to other judgments of a sister state.” 

A question of res adjudicata was decided in Napa Valley Electric 
Co. v. California , 05 but as the case involved the credit to be given 
to a state judgment in a federal court, it is not technically an appli¬ 
cation of the full-faith-and-credit clause. Yet the case is a prece¬ 
dent that would be followed when the second action is brought in 
the court of a sister state. Constitutional questions are frequently 
questions of common law which constitutional clauses make matters 
of adjudication in the Supreme Court. The Constitution brings the 
question before the Supreme Court, but does not direct how it shall 
be decided. The quarrel in the instant case was whether the refusal 
of the California Supreme Court to entertain an appeal from the 
state railroad commission or to order the record to be certified by 
the commission for review in the court was a final adjudication or 
merely a refusal to adjudicate. In holding it to be the former, Mr. 
Justice McKenna referred to the “common, and at times necessary, 
practice of courts to determine upon the face of a pleading what 
action should be taken upon it.” It was for the state court to decide 
what was proper practice under the statute—whether it might act 
without having the record of the commission before it. The Cali- 


“Fauntleroy v. hum, 210 U. S. 230, 28 Sup. Ct. 641 (1908). 
“251 U. S. 366, 40 Sup. Ct. 174 (1920). 




— IOI — 


fornia cases were thought to show that the state court regarded the 
refusal of applications for certiorari to review the orders of the 
commission as decisions that those orders are lawful. The refusal 
in question was therefore held to be an exercise of judicial power, 
and as the refusal was not appealed from, it was held a final judg¬ 
ment which precluded a reexamination of the same issues in a sub¬ 
sequent proceeding . 66 

IX. Administrative Power and Procedure 

Underlying all questions as to the propriety or the effect of admin¬ 
istrative action are the constitutional issues whether the delegation 
of power to the administrative officer is within the restrictions set 
by what is left of the principle of the separation of powers, whether 
the general regulations or the specific findings of the administration 
can be accepted as final, and whether the procedure indulged in by 
the administration is proper. These questions are frequently inter¬ 
related. The finality of administrative adjudications may depend 
upon whether they were reached by appropriate methods. The valid¬ 
ity of the regulation or order may depend upon the scope of the 
power that may be delegated. The requisites of the procedure may 
vary with the effect to be ascribed to the action taken. Summary 
proceedings may be sanctioned where the action taken is necessarily 


“As the Supreme Court’s decision of constitutional issues involving 
questions of jurisdiction and of res adjudicata depends often upon its con¬ 
ception of the proper principles of conflict of laws, the following notes and 
articles may be of interest to students of constitutional law: on domicil, 20 
Colum. L. Rev. 87, 33 Harv. L. Rev. 863, 18 Mich. L. Rev. 331, 332; on law 
governing question of capacity, 5 Cornell L. Q. 312, 33 Harv. L. Rev. 612, 
726, and Ernest G. Lorenzen, “The Theory of Qualifications and the Conflict 
of Laws”, 20 Colum. L. Rev. 247; on jurisdiction for divorce and effect of 
decree in other states, 20 Colum. L. Rev. 491, 617, 33 Harv. L. Rev. 729, 4 
Minn. L. Rev. 456, 29 Yale L. J. 119; on foreign judgments, 33 Harv. L. Rev. 
984, 18 Mich. L. Rev. 142, 4 Minn. L. Rev. 546, Herbert F. Goodrich, “En¬ 
forcement of a Foreign Equitable Decree”, 5 Iowa L. Bull. 230, and Ernest 
G. Lorenzen, “The Enforcement of American Judgments Abroad”, 29 Yale 
L. J. 188, 268; on injunction to restrain foreign proceedings, 33 Harv. L. Rev. 
92; on service of process at request of a foreign court, 33 Harv. L. Rev. 
978; on construction or enforcement of foreign statutes, 29 Yale L. J. 230, 
329, 798; on proof of foreign law, 33 Harv. L. Rev. 315; on “renvoi”, 29 
Yale L. J. 214. 



— 102 — 


subject to judicial review, while more careful investigation is 
required for determinations that may be conclusive. Above all, the 
extent of possible delegation and the propriety of modes of action 
vary with the nature of the interests with which the administration 
is dealing. Wide delegation and drastic procedure may be proper 
when the administration is running public business or dispensing 
public bounty, but improper when it is directly interfering with indi¬ 
vidual liberty. Indeed, there are few, if any, general principles of 
administrative law under our Constitution. Instead we have one 
set of rules for police interferences and other sets of rules for 
administrative action in the exercise of the powers of taxation or 
of eminent domain, the conduct of public business or the bestowal 
of public privileges . 67 

The cases involving administrative action in the fields of taxation 
and of eminent domain have already been reviewed. The wide scope 
allowed to administrative authorities in determining the area to be 
subjected to a special assessment is illustrated by Branson v. Bush 68 
and Goldsmith v. Prendergast Construction Co , 69 The hearing 
afforded the taxpayer on the question of his proportion of benefit 
was held adequate in Farncomb v. Denver, 10 but found doubtful in 
Oklahoma Ry. Co. v. Severns Paving Co. 11 Other questions as to 
the relief open to taxpayers against alleged unconstitutional levies 


m See John A. Fairlie, “Administrative Legislation”, 2 III. L. Bull. 373, 
and Frederick Green, “Separation of Governmental Powers”, 2 III. L. Bull. 
373, and 29 Yale L. J. 369. Questions of the delegation of power are con¬ 
sidered in 15 III. L. Rev. 108, 18 Mich. L. Rev. 328, and 6 Va. L. Rev. 441. 
Various phases of judicial control over administrative action are discussed 
in 20 Colum. L. Rev. 97, 33 Harv. L. Rev. 462, 478, and 29 Yale L. J. 358, 
361. Cases on the liability of officers are dealt with in 19 Colum. L. Rev. 
418, 20 Colum. L. Rev. 94, 210, 227, and 29 Yale L. J. 361. On the power of 
equity over public elections, see 29 YaeE L. J. 655; on eligibility of women for 
public office, 33 Harv. L. Rev. 295; on effect of Nineteenth Amendment on 
exclusion of women from juries, 8 Va. L. Rev. 589, on right of de jure officer 
to salary after payment to de facto officer, 18 Mich. L. Rev. 434; on expiration 
of term of office, 29 Yale L. J. 118. 

fl8 25i U. S. 182, 40 Sup. Ct. 113 (1919), 19 Mich. L. Rev. 127. 

* 9 252 U. S. 12, 40 Sup. Ct. 273 (1920), 19 Mich. L. Rev. 129. 

70 252 U. S. 7, 40 Sup. Ct. 271 (1920), 19 Mich. L. Rev. 129. 

71 251 U. S. 104, 40 Sup. Ct. 73 (1919), 19 Mich. L. Rev. 129. 




— 103 — 

are considered in Wallace v. Hines, 12 Shaffer v. Carter 13 Ward v. 
Love County 14 and Bradwell v. Carter County 15 though these cases 
relate only indirectly to administrative action. Administrative power 
and procedure in taking property by eminent domain is considered 
in Hays v. Port of Seattle 76 and Bragg v. Weaver, 11 which show 
that administrative officers may determine the necessity and expe¬ 
diency of the taking, that the taking may precede the determination 
of compensation where adequate provision is made for getting 
compensation later, and that the property owner is not entitled to a 
hearing before the administration on the question of compensation 
where the statute allows him to appeal from its award and get a 
judicial hearing of the question of what is due him. 

Administrative exercise of the police power was involved in a 
number of the cases reviewed under that head, and under miscel¬ 
laneous federal powers and the regulation of commerce. In Penn¬ 
sylvania R. Co. v. Pennsylvania? 8 it was declared that a state cannot 
give a public service commission power to do what the laws of the 
United States forbid, whether its action be called administrative 
or judicial. Several of the cases dealing with public utilities show 
that an administrative order is subject to all the judicial scrutiny 
that would be visited on a direct legislative prescription. The 
requirement that administrative action regulating rates must be so 
exercised as to afford to the victim a fair opportunity to contest the 
reasonableness of the rates before a judicial tribunal was passed 
upon in St. Louis, I. M. & S. Ry. Co. v. Williams , 70 Ohio Valley 
Water Co. v. Ben Avon Borough, 80 Oklahoma Operating Co. v. 
Love 81 and Oklahoma Gin Co. v. Oklahoma. 82 The reasonableness 
of rates prescribed by a commission was reviewed in Grosbeck v. 


72 253 U. S. 66, 40 Sup. Ct. 435 (1920), 19 Mich. L. Rev. 30, 121. 

73 252 U. S. 37, 40 Sup. Ct. 221 (1920), 19 Mich. L. Rev. 124. 

74 253 U. S. 17, 40 Sup. Ct. 419 (1920), 19 Mich. L. Rev. 133. 

”253 U. S. 25, 40 Sup. Ct. 422 (1920), 19 Mich. L. Rev. 133. 

”251 U. S. 233, 40 Sup. Ct. 125 (1920), 19 Mich. L. Rev. 149. 
”251 U. S. 57, 40 Sup. Ct. 63 (1919), 19 Mich. L. Rev. 149. 
”250 U. S. 566, 40 Sup. Ct. 36 (1919), 19 Mich. L. Rev. 27. 

”251 U. S. 63, 40 Sup. Ct. 71 (1919), 19 Mich. L. Rev. 141. 
•*253 U. S. 287, 40 Sup. Ct. 527 (1920), 19 Mich. L. Rev. 142. 
“252 U. S. 33 1, 40 Sup. Ct. 338 (1920), 19 Mich. L. Rev. 143. 
“252 U. S. 339, 40 Sup. Ct. 341 (1920), 19 Mich. L. Rev. 143. 



— 1<>4 — 


Duluth, S. S. & A. Ry. Co. 83 An industrial commission's award of 
damages for permanent facial disfigurement was sustained in New 
York Central Ry. Co. v. Bianc , 84 The jurisdiction and procedure of 
the Federal Trade Commission was considered in Federal Trade 
Commission v. Gratz . 85 The internal law of administration was 
involved in Burnap v. United States, 80 which dealt with the removal 
of federal officers. In Houston v. Ormes 87 a suit against the Secre¬ 
tary of the Treasury was held not to be a suit against the United 
States. 88 

While the federal government has no police power as such, it 
often uses its recognized powers for police purposes. Indeed, the 
term federal police power has now won recognition even from the 
Supreme Court. Several administrative exercises of this so-called 
federal police power were questioned in cases decided during the 
past term. In United States v. Standard Brewery 89 which held 
that the War Prohibition Act of 1918 applied only to intoxicating 
liquors, it was laid down that contrary rulings of the internal rev¬ 
enue department could not alter the terms of the statute and make 
conduct criminal which the statute does not. In Chicago, M. fr St. 
P. Ry. Co. v. McCaull-Dinsmore Co. 90 it was declared that the ques¬ 
tion whether a stipulation in an interstate bill of lading violates the 
federal statute against limiting liability for loss is a question of law 


83 250 U. S. 607, 40 Sup. Ct. 38 (1919), 19 Mich. L. Rev. 140. 

84 250 U. S. 596, 40 Sup. Ct. 45 (1919), 19 Mich. L. Rev 145. 

“253 U. S. 421, 40 Sup. Ct. 572 (1920), 19 Mich. L. Rev. 23, note 39. 

"252 U. S. 512, 40 Sup. Ct. 374 (1920), 19 Mich. L. Rev. 18. 

”252 U. S. 469, 40 Sup. Ct. 369 (1920), supra, p. 302. 

88 For a note on Ball Engineering Co. v. J. G. White Co., 250 U. S. 45, 39 
Sup. Ct. 393 (1919), on the subject of suits against the United States under 
the Tucker Act, see 29 Yaee L. J. 125. For other discussions of the liability 
of a government for the acts of its officers, see 19 Coeum. L. Rev. 407, 5 
Corneee L. Q. 78, 338, 33 Harv. L. Rev. 713, 735, 18 Mich. L. Rev. 433, and 
George DeForest Lord, “Admiralty Claims Against the Government”, 19 
Colum. L. Rev. 465. For comment on the tort liability of municipal corpora¬ 
tions see 20 Colum. L. Rev. 619, 620, s Corneee L. Q. 90, 18 Mich. L. Rev. 
708, 29 Yale L. J. 117, 911. The contractual powers and liabilities of munic¬ 
ipal corporations are treated in 20 Coeum. L. Rev. 336, 349, and 29 YaeE L. J. 
364. On another phase of the law of municipal corporations, see Richard W. 
Montague, “Law of Municipal Home Rule in Oregon”, 8 Caeie. L. Rev. 151. 

89 251 U. S. 210, 40 Sup. Ct. 139 (1920). 

90 253 U. S. 97, 40 Sup. Ct. 504 (1920). 



— 10 5 — 


which the courts must decide for themselves, regardless of any 
determination by the Interstate Commerce Commission that the 
stipulation in question is reasonable. 

The effect to be given to a reparation order of the Interstate Com¬ 
merce Commission was considered in Spiller v. Atchison, T. & S. 
F. R. Co. 91 The statute provided that the order of the commission 
that reparation is due the shipper should be prima facie evidence in 
actions brought by him against the carrier in courts. The carrier 
based his objections to such weight being accorded to the commis¬ 
sion’s findings on the ground that its procedure was unduly lax. 
Its reception of hearsay evidence was overlooked, not on the ground 
that it was entitled to accept such evidence, but for the reason that 
the carrier had failed to object to its reception on the ground of 
hearsay during the hearing before the commissioner. Yet the opin¬ 
ion hints that the commission has wide latitude in the matter of 
evidence, especially when its findings are made only prima facie 
evidence. It was explicitly declared that where the essential facts 
found by the commission are based on substantial evidence, and 
there has been no denial of the right to a fair hearing, its findings 
and order will not be rejected because improper evidence was admit¬ 
ted or the best possible available evidence was not produced or 
because a different conclusion might have been reached. 

Two more important cases protected Chinamen from deportation 
orders of immigration officials. Both involved Chinamen who had 
previously been in the United States and were returning to the 
United States after a temporary visit to China. White v. Ching 
Fong 92 involved an alien who was conceded by the administrative 
authorities to have been previously in this country, but who was 
ordered deported on the strength of an administrative finding that 
his original entry was unlawful. A writ of habeas corpus was 
awarded on the ground that under the statute a Chinese person 
already in the United States is entitled to a judicial determination 
of his right to remain and that this right is not lost by a temporary 
visit to China. His situation upon his return is not that of one first 
seeking to enter. 

“253 U. S. 117, 40 Sup. Ct. 466 (1920). 

” 253 U. S. 90, 40 Sup. Ct. 449 (1920). 



— io6 — 


Kivock Jan Fat v. White 93 had to do with a claim to citizenship. 
Here the petitioner while in this country and intending to visit 
China filed an application as provided by law for a “preinvestiga¬ 
tion of his claimed status as an American citizen.” The investiga¬ 
tion resulted in an official determination that he was an American 
citizen. During his absence in China anonymous communications 
to the commissioner of immigration started a new investigation, and 
upon his return he was denied entry. Objections to the hearing 
accorded on this occasion included the facts that the examining 
inspector submitted to the commissioner as evidence statements 
reported to be made by unnamed persons, that a demand by the 
petitioner for the names was refused, and that the examining inspec¬ 
tor failed to record in the testimony taken the fact that the three 
white persons of reputable character who testified to the petitioner’s 
American citizenship were confronted with him and recognized him 
as the boy they had known in his youth. These allegations were 
admitted by demurrer. While the court indicated disapproval of 
the reception in evidence of unsworn statements by unnamed per¬ 
sons, it stated that in view of the declaration by the commissioner 
that this report did not influence his decision, it might not say that 
this “rendered the hearing so manifestly unfair as to require rever¬ 
sal, if there were nothing else objectionable in the record.” But the 
failure to record the fact that there was mutual recognition between 
the petitioner and the three white witnesses was held enough to 
entitle the petitioner to a writ of habeas corpus. While the decision 
goes on the ground that the hearing did not fulfil the requirements 
of the statute, it is likely that the court would hold, if necessary, 
that a fair hearing on the question of citizenship is essential to due 
process of law. Having found the administrative hearing unfair, 
the Supreme Court ordered the district court to hear and determine 
the question of citizenship on its merits, after the practice approved 
in an earlier case. 94 It would seem that under the Chin Fong case, 
just considered, the petitioner was also entitled to a judicial hearing 


“253 U. S. 454, 40 Sup. Ct. 566 (1920). 

“Chin How v. United States, 208 U. S. 8, 28 Sup. Ct. 201 (1908). For 
a discussion of this procedure see “Judicial Review of Administrative Action 
in Immigration Proceedings”, 32 Harv. L. Rev. 360. 



— io7 — 


because he had concededly been a long-time resident prior to his 
recent visit to China. 

Plainly greater latitude is allowed administrative officers in action 
which decides only whether individuals are entitled to the benefits 
conferred by statutes. Thus, in United States v. Lane os the court 
accepted without question the finding of the land department that 
work done by a prospector was not enough to entitle him to privi¬ 
leges open to those who have “opened or improved” a coal mine. 
Mr. Justice McKenna said that, where there is discretion, the find¬ 
ing of the land department, though disputable, is impregnable to 
mandamus. So, in Cameron v. United States 96 it was held that the 
findings of the Secretary of the Interior that a tract covered by a 
mineral location is not mineral land, and that there had been no 
sufficient discovery, are conclusive, in the absence of fraud or impo¬ 
sition. United States v. Poland 97 held that where a land patent was 
issued by land officers in violation of the statute the government is 
entitled to have it canceled unless a successor of the patentee is a 
bona fide purchaser. A patent was also canceled in United States 
v. Southern Pacific Co. 98 In this same group may be put National 
Lead Co. v. United States which accepted the interpretation of 
the Treasury Department that the drawback allowed on exportation 
of products from raw materials previously imported should, when 
more than one product is derived from those materials, be appor¬ 
tioned according to the relative value of the respective products and 
not according to their relative weight. This was an instance where 
the administration had to fill in a gap in the statute. Though in 
the particular case the court plainly thought the administrative 
ruling right in itself, it often shows an inclination not to substitute 
its opinion for that of the administration, particularly when the 
complainant is in the position of looking a gift horse in the mouth. 

Several cases involved administrative determinations in the course 
of carrying on government business. Grand Trunk Western Ry. 


“250 U. S. 549, 40 Sup. Ct. 33 (1919)- 
”252 U. S. 450, 40 Sup. Ct. 410 (1920). 

91 251 U. S. 221, 40 Sup. Ct. 127 (1920). 

“251 U. S. 1, 40 Sup. Ct. 47 (1919). See 20 Colum. L. Rev. 228. 
"252 U. S. 140, 40 Sup. Ct. 237 (1920). 



io8 — 


Co. v. United States 100 refused to give weight to a long-continued 
administrative construction that a certain statute relating to over¬ 
payments for carrying the mails does not apply to a certain railroad, 
where this construction was due to a mistake of fact as to whether 
the road in question was in the class of the land-aided roads. In 
Kansas City So. Ry. Co. v. United States 101 it was held that the fail¬ 
ure of the Postmaster General to fine companies for less than twenty- 
four hours’ delay in delivery of the mails is not to be taken as an 
administrative construction that the statute empowered him to 
impose fines only when the delay exceeds twenty-four hours. New 
York, N. H. & H. R. Co. v. United States 102 accepted the adminis¬ 
trative practice of weighing the mails only once in four years, as 
warranted by the letter of the statute. The Mail Divisor Cases 103 
held railroads bound by the average weight of mails determined by 
the administration. Only four of the judges thought that the 
method employed was warranted by the statute, but two others held 
the statute directory only and not mandatory, and thought that, since 
the Postmaster General had discretion as to the rate of pay and 
as the companies had carried the mails on his terms when they were 
not by law obliged to, they were bound by the conditions under 
which they undertook the service. In Eastern Extension, Austral¬ 
asia & China Tel. Co. v. United States 104 and E. W. Bliss Co. v. 
United States 105 the court had to consider whether the action of 
administrative officers had been such as to create a claim against 
the government on which it would be subject to suit in the court of 
claims. 106 

Two cases involved administrative dealings with the Indian tribes. 
United States v. Omaha Tribe of Indians 107 denied recovery against 


100 252 U. S. 112, 40 Sup. Ct. 309 (1920). 

101 252 U. S. 147, 40 Sup. Ct. 257 (1920). 

102 251 U. S. 123, 40 Sup. Ct. 67 (1919). Mr. Justice Brandeis dissents. 
See 29 Yale L. J. 666. 

103 251 U. S. 326, 40 Sup. Ct. 162 (1920). Justices Day and Van Devanter 
dissent. Mr. Justice McReynolds did not sit. 

104 251 U. S. 355, 40 Sup. Ct. 168 (1920). 

105 253 U. S. 187, 40 Sup. Ct. 455 (1920). 

108 For references to discussions of claims against governments see note 
88, supra. 

107 253 U. S. 275, 40 Sup. Ct. 522 (1920). 



—109 — 


the 'United States for depredations committed by a hostile tribe, and 
held that the agreement in a treaty to give protection so long as the 
President may deem it necessary imposed no liability in the absence 
of a finding that there was failure to provide such protection as the 
President deemed necessary. The case illustrates the principle that 
a right dependent upon administrative action cannot arise unless 
the requisite action is taken. United States v. Payne 108 held that 
the Secretary of the Interior is the final judge of whether names 
shall be enrolled as members of the Creek Nation and that until he 
has taken final action he may abandon his preliminary conclusions. 
The Secretary had written the commissioner approving his report, 
but he was allowed to rescind this without giving any hearing or 
adducing any reasons. Such action prior to any actual enrollment 
was held not to deny due process of law. 

Two other cases accepted long-continued administrative construc¬ 
tions of statutes. Ash Sheep Co. v. United States 1,09 adopted the 
administrative conclusion that '‘cattle” includes sheep, in view of 
warrant in the dictionaries aided by the presumption that Congress 
would have amended the statute had it disliked the administrative 
interpretation of its scope. In Corsicana National Bank v. John¬ 
son 110 Mr. Justice Pitney declared: 

“Whatever view we might entertain, were the matter res 
nova, we are advised that by the practice and administrative 
rulings of the Comptroller of the Currency during a long 
period, if not from the beginning of national banking, liabili¬ 
ties which are incurred by one person avowedly and in fact 
as surety or as indorser for money borrowed by another are 
not included in the computation. We feel constrained to 
accept this as a practical construction of the section. * * *” 

The question arose in a suit by a national bank against one of its 
officers for loaning amounts in excess of that permitted by the 
statute to a single borrower. 


108 253 U. S. 209, 40 Sup. Ct. 513 (1920). 
10 * 252 U. S. 159, 40 Sup. Ct. 241 (1920). 
110 251 U. S. 68, 40 Sup. Ct. 82 (1919). 



— no — 


X. Intergovernmental Relations 

Several of the cases already reviewed involve relations between 
the states and the United States. In Hawke v. Smith 111 and National 
Prohibition Cases 112 it was settled that a state legislature acts as a 
federal agency in passing upon proposed amendments to the federal 
Constitution, and that therefore a state cannot subject the action 
of the legislature to a referendum. Evans v. National Bank of 
Savannah 113 illustrates the familiar rule that national banks are sub¬ 
ject to state control only to the extent permitted by Congress. Ervien 
v. United States 114 shows that a stipulation in an enabling act as to 
the use to be made of lands therein granted to the thereby newly- 
created state is binding on the state after it attains a full-fledged 
status and will be enforced by the federal courts. United States v. 
Osage County 115 lets the United States as guardian of Indians sue 
in a federal court to protect its wards from wrongful state taxa¬ 
tion. Duhne v. New Jersey 110 holds that the original jurisdiction 
of the Supreme Court in controversies to which a state is a party 
is confined to cases in which the federal judicial power extends to 
suits against a state, and therefore does not include a suit sought 
to be brought against a state by one of its citizens. 117 

Relations between states brought several cases to the Supreme 
Court. Questions of fact with regard to boundaries were adjudi¬ 
cated in Minnesota v. Wisconsin 118 and Arkansas v. Mississippi. 11 * 
In Ohio v. West Virginia 120 and Pennsylvania v. West Virginia 121 

m 253 U. S. 221, 40 Sup. Ct. 495 (1920), 19 Mich. L. Rev. 2. 

m 253 U. S. 350, 40 Sup. Ct. 486 (1920), 19 Mich. L. Rev. 4. 

“*251 U. S. 108, 40 Sup. Ct. 58 (1919), 19 Mich. L. Rev. 18. 

114 251 U. S. 41, 40 Sup. Ct. 75 (1919), 19 Mich. L. Rev. 16. 

118 251 U. S. 128, 40 Sup. Ct. 100 (1919), 19 Mich. L. Rev. 17. 

UB 25i U. S. 311, 40 Sup. Ct. 154 (1920), supra, p. 301. 

117 A question of intergovernmental relations is considered in M. G. Wal¬ 
lace, “Taxation by the States of United States Bonds Held by Corporations", 
6 Va. L. Rev. 20. 

118 252 U. S. 273, 40 Sup. Ct. 314 (1920). 

n * 252 U. S. 344, 40 Sup. Ct. 333 (1920). 

On such questions of fact as those involved in this and in the preceding 
case, see Harvey Hoshour, “Boundary Controversies Between States Border¬ 
ing on a Navigable River”, 4 Minn. L. Rev. 463. 

120 252 U. S. 563, 40 Sup. Ct. 357 (1920). 

181 252 U. S. 563, 40 Sup. Ct. 357 (1920). 



— Ill — 


the court granted motions to consolidate the cases for the purpose 
of taking testimony, and appointed a commissioner for that pur¬ 
pose. Four cases each styled Oklahoma v. Texas 122 dealt with 
petitions to intervene or granted leave to file them. One issued an 
order granting an injunction and appointing a receiver, and another 
issued an order instructing the receiver. 

Columbia University. Thomas Reed Powell. 

122 252 U. S. 372, 40 Sup. Ct. 353 (1920); 253 U. S. 465, 40 Sup. Ct. 580, 
580, 582 (1920). 





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